The theory that suggested countries would mutually benefit from trade by specializing in export goods they could produce at lower opportunity costs than another country is called
Added by Troy C.
Step 1
Step 1: The theory described in the question is known as the theory of comparative advantage. Show more…
Show all steps
Your feedback will help us improve your experience
Jennifer Stoner and 56 other Microeconomics educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Key Concepts
Recommended Videos
Among the following, what conclusion can be given to the new trade theory? a) A country may export a good or import it, but not both. b) Consumers gain from the increased variety of goods that trade makes available. c) Countries as a whole must gain from trade. d) A country can only hurt itself by using government policies to promote exports.
Jennifer S.
According to the principle of comparative advantage, - countries should specialize in the production of goods for which they use more resources than their trading partners - countries with a comparative advantage in the production of every good need not specialize - countries should specialize in the production of goods for which they have a lower opportunity cost of production than their trading partners - countries should specialize in the production of goods for which they use fewer resources than their trading partners
Andrew D.
A country is said to have absolute advantage of trade if it can produce at a lower opportunity cost. produce at a higer opportunity cost. produce less goods or services as compared to other countries. produce more goods or services as compared to other countries.
Aparna S.
Recommended Textbooks
Principles of Economics
Principles of Microeconomics for AP® Courses
Economics
Transcript
Watch the video solution with this free unlock.
EMAIL
PASSWORD