The Theory of Comparative Advantage Suggests That

question 2

Multiple Choice

The theory of comparative advantage suggests that:

• A)Both trading parties can gain if they specialize in producing the good in which they have an absolute advantage.
• B)Both trading parties can gain if they specialize in producing the good for which they have the lower opportunity cost, and that all the gains from trade will accrue to the more productive party.
• C)Both trading parties can gain if they each specialize in producing the good for which they have the higher opportunity cost.
• D)Both trading parties can gain if they each specialize in producing the good for which they have the lower opportunity cost.
• E)None of the above.

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Definitions:

Premises Guarantee

In logic, the condition where the premises of an argument necessarily lead to its conclusion, ensuring its validity.

Existential Import

The implication that the subjects referred to in a proposition actually exist.

Categorical Syllogism

A form of deductive reasoning consisting of three statements: two premises and a conclusion, each stating a relationship between categories.

Unstated Premise

An unstated premise is an implicit assumption that is not directly expressed within an argument but is necessary for the argument's logic to hold.