The Law of Comparative Advantage Suggests That

question 255

Multiple Choice

The law of comparative advantage suggests that

• A)mutually beneficial trade can take place whenever the pre-trade relative costs of production differ between nations.
• B)trade is comparatively more beneficial to big countries than small ones.
• C)mutually beneficial trade requires each country to have an absolute advantage in the production of at least one good.
• D)consumption cannot exceed production-possibilities frontiers.
• E)mature capitalism is inherently exploitative of small nations.

---

Definitions:

Imported

Goods or services brought into one country from another for sale.

Tariff

A tax imposed on imported goods and services, tariffs are used by governments to control trade, protect domestic industries, or generate revenue.

Imported Oil

Oil brought into a country from another country to meet its demand for energy and petroleum products.

Tariff

A tax imposed by a government on imports or exports of goods.