If Nations Trade on the Basis of Comparative Advantage

question 21

Multiple Choice

If nations trade on the basis of comparative advantage:

• A) a nation usually can gain from trade only at the expense of its trading partners.
• B) exporting nations gain from trade and importing nations lose.
• C) importing nations gain from trade and exporting nations lose.
• D) all trading partners can gain from trade.

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Definitions:

Economic Choice

Economic choice involves making decisions on the allocation of scarce resources among competing needs or desires to maximize benefits and utility.

Competitive Behavior

Actions taken by companies aimed at gaining an advantage over their rivals in the market, often through price adjustments, product innovations, and marketing strategies.

Marginal Cost

The added cost of producing one additional unit of a product or service.