Ricardo's Theory Showed That If Nations Are Allowed to Trade

question 76

Multiple Choice

Ricardo's theory showed that if nations are allowed to trade freely, the
Result will be that:

• A)all trading nations benefit by trade.
• B)the manufacturing sector benefits but the consumers lose out.
• C)workers benefit but the government loses tax revenue.
• D)the gains from trade offset the losses from trade exactly.

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Definitions:

Marginal Private Cost

The cost incurred by a firm for producing one additional unit of a good, exclusive of any external costs.

Technology Spillovers

Benefits that firms or countries obtain by imitating or learning from the innovations of others, often without incurring the cost of innovation.

Subsidies

Financial assistance grants or tax breaks provided by the government to support businesses, organizations, or individuals, encouraging production or consumption of certain goods and services.

Computer Chips

Small pieces of semiconductor material (usually silicon) with an integrated circuit (IC) used in electronic devices to perform computing tasks and other functions.