How Do Countries Know When They Have a Comparative Advantage

question 111

Multiple Choice

How do countries know when they have a comparative advantage in the production of a good?

• A) Government accountants collect cost data from countries and analyze it to find out which country has a comparative advantage in the production of which good.
• B) They know as the result of individuals trying to earn profits and buying low and selling high in the process.
• C) The United Nations Economic Conference Group analyzes cost data from countries and determines which country has a comparative advantage in the production of which good.
• D) There is not one major way that countries acquire this information.

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Definitions:

Constitution

Primary regulations or authoritative standards that oversee the conduct of a state or another type of organization.

The Federalist

Collection of eighty-five essays that appeared in the New York press in 1787–1788 in support of the Constitution; written by Alexander Hamilton, James Madison, and John Jay and published under the pseudonym “Publius.”

Popular Self-Government

A system in which the general public has the power to govern themselves, usually through elected representatives.

Central Authority

The governing body or entity at the highest level of an organization or state, with overarching control or direction.