The United States Decides to Follow Its Comparative Advantage and Specialize

question 100

Multiple Choice

The United States decides to follow its comparative advantage and specialize in the production of airplanes. Which of the following will occur?

• A) the quantity of airplanes demanded in the United States will increase
• B) the world price of airplanes will increase
• C) there will be no change in the price of airplanes in the United States
• D) more airplanes will be produced in the United States

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Definitions:

Equilibrium Quantity

The amount of products or services available that matches the amount sought after at the price where supply meets demand.

Socially Optimal

A condition in which resources are allocated in the most efficient way from the perspective of society as a whole.

Positive Externality

A beneficial effect experienced by a third-party or the society at large, as a result of an economic activity, that isn't reflected in the cost.

Garden

A planned space, usually outdoors, set aside for the display, cultivation, and enjoyment of plants and other forms of nature.