a. The “gains form trade” refers to the increased __________ attributable to specialization and trade.

Fill in the blanks to make the following statements correct.

b. Suppose Argentina can produce one kilogram of beef for $2.50 and Brazil can produce one kilogram of beef for $2.90. Argentina is said to have a(n) __________ in beef production over Brazil. The gains from trade do not depend on __________.

c. Comparative advantage is based on __________ rather than absolute costs.

d. It is possible for a country to have a comparative advantage in some good and a(n) in none.

e. If all countries specialize in the production of goods for which they have a comparative advantage, then world output will __________.

f. If opportunity cost are the same in all countries, there is no __________ and no possibility of __________.

Expert Solution

a) Ans: Output

b) Answer to blank 1: Comparative advantage

Answer to blank 2: Absolute advantage

c) Ans: Comparative costs

d) Ans: True

e) Ans: Rise

f) Answer ti blank 1: Trade

Anxswer to blank 2: Gain from trade

Explanation to all the answers:

A country can specialize in the production of good in which ptoduction it has comparative advantage. In other words., it can produce the good at lower opportunity cost than other nations. When each country specialize in the production of the good in which ptoduction it has comparative advantage, the world output will increase.

Rahul Sunny answered 1 year ago

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Question

a. The “gains form trade” refers to the increased __________ attributable to specialization and trade.

Solutions

Expert Solution

Related Solutions

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