According to the Theory of Comparative Advantage, a Country

question 73

Multiple Choice

According to the theory of comparative advantage, a country

• A) exports the goods in which its has a comparative advantage.
• B) imposes tariffs on goods in which it does not have comparative advantage.
• C) imports the goods in which it has a comparative advantage.
• D) exports goods in which it has absolute advantage.

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Definitions:

Free Trade

An economic policy that allows imports and exports between countries with minimal or no tariffs, quotas, subsidies, or prohibitions to facilitate trade.

Trade-offs

The balancing of factors or alternatives where the improvement of one results in the compromise or decline of another.

Scarcity

The fundamental economic problem of having seemingly unlimited human wants in a world of limited resources.

Poverty

A condition where individuals or communities lack the financial resources and essentials for a minimum standard of living.