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Kaisha Jean-Louis
on Oct 11, 2024

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The law of comparative advantage suggests that

A) mutually beneficial trade can take place whenever the pre-trade relative costs of production differ between nations.
B) trade is comparatively more beneficial to big countries than small ones.
C) mutually beneficial trade requires each country to have an absolute advantage in the production of at least one good.
D) consumption cannot exceed production-possibilities frontiers.
E) mature capitalism is inherently exploitative of small nations.

Comparative Advantage

The ability of an entity to produce a good or service at a lower opportunity cost than another entity, leading to more efficient trade possibilities.

Mutually Beneficial Trade

Trade that provides benefits to both parties involved, allowing them to attain a level of satisfaction or economic utility that would not be possible individually.

  • Elucidate the notions of comparative and absolute advantage in international trade.
  • Explain the advantages and possible disadvantages of focusing on specific skills and engaging in trade.
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Marquisha AleaseOct 12, 2024
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