David Ricardo's Theory of Comparative Advantage Has the Following Policy

question 15

Multiple Choice

David Ricardo's theory of comparative advantage has the following policy implication:

• A) Liberalization of international trade will enhance the welfare of the world's citizens
• B) International trade is a zero-sum game
• C) One country will benefit from trade at the expense of another country
• D) Restriction of international trade will enhance the welfare of the world's citizens

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Definitions:

Accounting Profits

Accounting profits represent the financial gains of a business as calculated by subtracting total explicit costs from total revenues, according to standard accounting practices.

Industry Entry

The act or process of starting a new business or expanding into a new segment within a particular market or industry.

Average Product

The total output produced by a firm divided by the number of inputs used to produce that output.