2. Assess all the statements below and judge which of them is true and which is false. Provide a short justification for your assessment. According to the Ricardian model… a) …if only one of the countries have an absolute advantage, there is no reason for beneficial trade. b) …if each country has a comparative advantage, there is a reason for beneficial trade. c) …if each country has a comparative advantage, to benefit from trade each country should specialize in consumption and trade of the good in which they are comparatively more efficient
2. Assess all the statements below and judge which of them is true and which is false.
Provide a short justification for your assessment.
According to the Ricardian model…
a) …if only one of the countries have an absolute advantage, there is no reason for beneficial
trade.
b) …if each country has a
c) …if each country has a comparative advantage, to benefit from trade each country should
specialize in consumption and trade of the good in which they are comparatively more efficient.
d) …if countries having comparative advantage engage in trade, there will be a net positive economic effect, but the distribution of the benefits might be uneven.
e) …if countries having comparative advantage engage in trade, each country will equally benefit
from trade.
Step by step
Solved in 2 steps