In the Real World We Don't Observe Countries Completely Specialising

question 87

Multiple Choice

In the real world we don't observe countries completely specialising in the production of goods for which they have a comparative advantage.One reasons for this is

• A)comparative advantage works better in theory than in practice.
• B)some countries have more resources than other countries.
• C)tastes for many traded goods are similar in many countries because of globalisation.
• D)production of most goods involves increasing opportunity costs.

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Definitions:

Renewable Resources

Natural resources that can be replenished naturally over time, such as solar energy, wind, and biomass.

Nonrenewable Resources

Natural resources that cannot be replenished at the same rate at which they are consumed.

Incentive Structures

Frameworks within an organization or economy designed to motivate and encourage specific behaviors and outcomes among participants.

Extraction Costs Curve

A graphical representation that shows how the cost of extracting a resource varies with the quantity extracted.