Chapter 9, Problem 8SQ

The principal concept behind comparative advantage is that a nation should   maximize its volume of trade with other nations use tariffs and quotas to protect the production of vital products for the nation concentrate production on those products for which it has the lowest domestic opportunity cost strive to be self-sufficient in the production of essential goods and services   A tariff is a ? Tax Price ceiling Quantity limit Subsidy

The gains from trade are   evident in economic models, but seldom observed in the real world. evident in the real world, but impossible to capture in economic models.      a result of more efficient resource allocation than would be observed in the absence of trade.            based on the principle of absolute advantage.

How does comparative advantage play a key role in specialization & trade ?

Which of the assumptions of comparative advantage seem unrealistic? Fixed technology and imperfect competition in the market Unemployment in perfect competition Immobile factors of production and higher transportation costs Fixed technology and imperfect competition in the labour market Free trade and immobile factors of production

The principle of comparative advantage states that countries should specialize in the production of goods for which they have a lower opportunity cost of production than their trading partners.  True  False

how does Comparative Advantage Theory explain the motivation of international business ?

Explain the following in detail with suitable examples. Absolute Advantage Comparative Advantage Country Similarity Theory Product Life Cycle Theory Global Strategic Rivalry Theory

According to the theory of Comparative Advantage, participation in international trade will always leave a country better off. Group of answer choices True False