Which Theory of International Trade Directly Explains Why There Are

question 15

Multiple Choice

Which theory of international trade directly explains why there are only two to three producers of airlines in the world today?

• A) absolute advantage
• B) new trade
• C) comparative advantage
• D) product life cycle
• E) mercantilism

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Definitions:

Absolute Advantage

The ability of an individual, company, or country to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service.

Jobs Argument

An economic perspective that emphasizes the creation or maintenance of employment as a primary consideration in policy-making.

Unfair-Competition Argument

A contention in international trade that certain practices give companies or countries an unjust advantage, such as labor exploitation or environmental bypassing.

Comparative Advantage

An economic theory that describes how countries gain from trade by specializing in goods they can produce more efficiently than others.