According to ________, Trade Between Two Countries Allows Each of the Trading

question 281

Multiple Choice

According to ________, trade between two countries allows each of the trading countries to allocate its resources most efficiently.

• A) the Heckscher-Ohlin theorem
• B) the theory of absolute advantage
• C) the General Agreement on Tariffs and Trade
• D) the theory of comparative advantage

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Definitions:

Consumer Surplus

Consumer surplus is the difference between the total amount consumers are willing and able to pay for a good or service and the total amount they actually pay.

Property Rights

The legal rights to own, use, and dispose of assets including real estate, personal possessions, and intellectual property.

Producer Surplus

The difference between what producers are willing and able to sell a product for and the actual price they receive, representing the extra benefit to producers.

Consumer Surplus

The difference between the total amount that consumers are willing to pay for a good or service and the total amount they actually pay.