In the Real World We Don't Observe Countries Completely Specialising

question 87

Multiple Choice

In the real world we don't observe countries completely specialising in the production of goods for which they have a comparative advantage.One reasons for this is

• A)comparative advantage works better in theory than in practice.
• B)some countries have more resources than other countries.
• C)tastes for many traded goods are similar in many countries because of globalisation.
• D)production of most goods involves increasing opportunity costs.

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Definitions:

Flexibility

The ability of a system or organization to adapt to changes, variations, or unexpected circumstances without significant loss of functionality or efficiency.

Uncertainty

The state of having limited knowledge where it is impossible to exactly describe the existing state, a future outcome, or more than one possible outcome.

Economic Factors

Variables and conditions affecting an economy’s performance, such as inflation rates, interest rates, employment levels, and gross domestic product (GDP).

Demand Uncertainty

The unpredictability of customer demand, making it difficult for businesses to accurately forecast sales.