Identify the Truthfulness of the Following Statements

question 25

Multiple Choice

Identify the truthfulness of the following statements.
I. If country A has a comparative advantage over country B in the production of good X, then the opportunity cost of producing good X in country A is lower than in country B.
II. If country A has a comparative advantage over country B in the production of good X, then country A cannot gain from trade with country B.

• A) Both I and II are true.
• B) Both I and II are false.
• C) I is true; II is false.
• D) I is false; II is true.

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Definitions:

Developing Countries

Refers to nations with lower levels of income, industrialization, and often a lower Human Development Index compared to developed countries.

Industrial Market Countries

Nations with economies mainly based on industrial production and services, with advanced technological infrastructure.

Labor Force

The labor force consists of all the working-age population who are willing and able to work, including both employed and unemployed individuals.

Agriculture

The practice of cultivating the soil, growing crops, and raising livestock for food, fiber, and other products that sustain human life.