Which of the Following Statements Correctly Describes International Trade in Accordance

question 115

Multiple Choice

Which of the following statements correctly describes international trade in accordance with comparative advantage?

• A)Trade is impossible unless there exists a purely competitive market for foreign exchange.
• B)Trade makes all the citizens of the trading countries better off,which is a clear example of a Pareto improvement.
• C)Trade may well make some citizens in each trading country worse off.
• D)Trade requires the judicious application by government of tariffs and quotas in order to discourage production according to comparative disadvantage.
• E)Trade requires that the economies of the trading partners be of roughly equal size (United States versus Andorra just does not work).

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