When a Country Loses Its Comparative Advantage in the Production

question 29

Multiple Choice

When a country loses its comparative advantage in the production of a good:

• A)it should stop trading and become self-sufficient.
• B)it will gain the comparative advantage in the production of another good.
• C)it will become a loser in trade in the long run.
• D)it will still have the absolute advantage in the production of the good.

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Definitions:

Profits and Losses

The financial gain or loss that a business experiences, calculated as the difference between revenue and expenses.

Real Assets

Assets that have physical form or are tangible, such as real estate, commodities, or natural resources, as opposed to financial assets like stocks or bonds.

Wealth Distribution

The manner in which wealth is shared among individuals in a society, often analyzed for its levels of equality or inequality.

Coincidence of Wants

A situation in a barter economy where two parties each possess goods or services that the other wants, facilitating a direct exchange without the need for money.