Assume That Greece Has a Comparative Advantage in Fish and Germany

question 60

Multiple Choice

Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars. What will happen if these two countries specialize and trade according to their comparative advantage?

• A)All individuals in both countries will benefit.
• B)Greece will specialize in and export cars.
• C)Germany will produce more cars than in the absence of trade.
• D)Germany will produce more fish than in the absence of trade.

Understand the concept of efficiency in economics.

Differentiate between empirical and theoretical aspects of economics.

Comprehend the impact of external factors on economic indicators and outcomes.

Grasp the significance of testing economic theories with data (empirical economics).

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Definitions:

Life Expectancy

The average number of years an individual is expected to live, based on current mortality rates.

Production Costs

The total expenses incurred in the manufacturing of a product, including labor, materials, and overhead costs.

Short-run Economic Profits

Profits earned by a firm in the short run, where not all inputs can be varied and some fixed costs are still incurred.

Competitive Industries

Sectors of the economy where businesses actively compete with each other to offer goods or services to consumers, often characterized by low barriers to entry and a high level of innovation.