What Does the Theory of "Comparative Advantage" Hold

question 79

Multiple Choice

What does the theory of "comparative advantage" hold?

• A) Each nation has an economic advantage relative to other nations in terms of purchasing power parity rates.
• B) Each nation has an economic advantage relative to other nations for the production of some goods.
• C) Economic advantage comes from producing the most appropriate commodity.
• D) Historically, Northern countries have held numerous advantages which make it difficult for Southern countries to benefit from the opening up of the world market.
• E) Some nations will be unable to benefit from an open, globalized market.

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Definitions:

Maximin Strategy

A decision rule used in game theory and decision theory aiming to maximize the minimum payoff.

Dominant Strategies

A strategy in game theory that yields the best outcome for a player, no matter what the other players do.

Pollute

To contaminate the natural environment with harmful or poisonous substances, adversely affecting air, water, soil, and ecosystems.

Constant-Sum Game

A situation in game theory where the total gains and losses among participants are distributed equally, so that the sum of benefits and losses is constant.