When nations specialize according to their comparative advantage:
total production and consumption in the world increase
.
Which of the following happens when countries that specialize in producing products they have a comparative advantage in trade with each other?
Countries are better off
if they specialize in producing the goods for which they have a comparative advantage. They can then trade for the goods for which other countries have a comparative advantage.
What happens when countries specialize according to their comparative advantage?
Specialization according to comparative advantage
results in a more efficient allocation of world resources
. Larger outputs of both products become available to both nations.
Why is specialization An important reason for trade quizlet?
specialization and exchange
enable us to enjoy greater production and higher living standards than would otherwise be possible
. As a result, all economies exhibit high degrees of specialization and exchange.
Is specialization based on comparative advantage?
Economies that realize specialization have
a comparative advantage
in the production of a good or service. Comparative advantage refers to the ability to produce a good or service at a lower marginal cost and opportunity cost than another good or service.
Why can’t a country have comparative advantage in both goods?
In international trade, no country can have a comparative advantage in the production of all goods or services. In economic terms, a country has a comparative advantage when it can produce at
a lower opportunity cost than that
of trade partners.
When a country has a comparative advantage in the production of a good?
Transcribed image text: When a country has a comparative advantage in the production of a good, it means that
it can produce this good at a lower opportunity cost than its trading partner
. Then the country will specialize in the production of this good and trade it for other goods.
In which situation does one country have a comparative advantage over another country quizlet?
one country has comparative advantage over another in the
production of a particular good relative to other goods if it produces that good less inefficiently (more efficiently) compared with the other country
.
When a country has a comparative advantage in the production of a good quizlet?
A country has comparative advantage in the production of a good if
it can produce that good at a lower opportunity cost relative to another country
. the difference between the opportunity cost of producing the product domestically versus the cost of purchasing the product from another country receives from trade.
Which country has a comparative advantage for producing cups?
Agrabah
has the absolute advantage in producing cups because 50>20. h. To have comparative advantage means to have lower opportunity cost.
What is the law of comparative advantage quizlet?
law of comparative advantage. states
that countries gain when they produce items they are most efficient at producing
and are at lowest opportunity cost. exports. goods and services produced in one country and sold to other countries.
How do nations benefit from international trade quizlet?
Benefits of international trade:
Consumers benefit with high-quality goods at lower prices
. Producers improve profits be expanding their operations. Workers benefits with higher employment rates.
Is it possible for one country to have both an absolute advantage and comparative advantage over another country quizlet?
One key difference is that one
person can have an absolute advantage in both goods
, but it is impossible for one person to have a comparative advantage in both goods due to the opportunity cost of a product being the inverse of the opportunity cost of the other. … Comparative advantage is more important for trade.
What is an example of a comparative advantage?
Comparative advantage is
what you do best while also giving up the least
. For example, if you’re a great plumber and a great babysitter, your comparative advantage is plumbing. That’s because you’ll make more money as a plumber.
What is the key to comparative advantage?
The key to understanding comparative advantage is
a solid grasp of opportunity cost
. Put simply, an opportunity cost is a potential benefit that someone loses out on when selecting a particular option over another.
What is the best example of specialization?
When an economy can specialize in production, it benefits from international trade. If, for example, a country can produce
bananas
at a lower cost than oranges, it can choose to specialize and dedicate all its resources to the production of bananas, using some of them to trade for oranges.
