The Introduction of New Technologies That Allow Producers to Specialize

question 65

Multiple Choice

The introduction of new technologies that allow producers to specialize in those activities in which they are relatively more efficient is an example of how overall productivity increases because of

• A) the principle of comparative advantage.
• B) diminishing returns to capital.
• C) the scarcity principle.
• D) the equilibrium principle.
• E) the cost-benefit principlE.

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Definitions:

Comparative Advantage

The economic principle that a country or entity should produce goods and services for which it has a lower opportunity cost than its trading partners.

Mutual Gain

A situation or outcome in negotiation or trade where all parties involved benefit or achieve some level of advantage.

Tariffs

Tariffs are taxes imposed by a government on imported or exported goods.

Quotas

Government-imposed trade restrictions that limit the quantity or monetary value of goods that can be imported or exported during a specified time.