The Idea of Comparative Advantage Implies That People or Countries

question 175

Multiple Choice

The idea of comparative advantage implies that people or countries

• A) should specialize in the production of goods.
• B) can gain from trading.
• C) can consume at a point outside their production possibilities frontier.
• D) all of the above.

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Definitions:

Foreign Competition

The competition that domestic companies face from products and services produced in other countries.

Adam Smith

A Scottish economist and philosopher known as the father of modern economics, famous for his work "The Wealth of Nations."

David Ricardo

David Ricardo was a British political economist best known for his theories on comparative advantage, which describe how nations can benefit from trading.

International Trade

The exchange of goods and services between countries, which allows for greater diversity of products, lower prices, and increased economic efficiency.