What is the law of comparative advantage, and why is it important in international trade?
The law of comparative advantage states that aggregate output is maximized when countries specialize in the production of goods for which they are the lowest opportunity cost producer, and then trade for other goods. Tit explains how countries can improve their situation through trade, rather than producing all goods themselves.
You might also like to view...
If a market system is functioning well, we can conclude that goods with
A. high opportunity costs tend to have high money costs. B. low opportunity costs tend to have high money costs. C. high opportunity costs tend to have low money costs. D. low opportunity costs tend to have zero money costs. E. high opportunity costs tend to have zero money costs.
If in the market for oranges the supply has increased, then
A) the supply curve for oranges has shifted to the left. B) the supply curve for oranges has shifted to the right. C) there has been a movement upwards along the supply curve for oranges. D) there has been a movement downwards along the supply curve for oranges.
Federal budget deficits
A. help stabilize the economy during recessions and depressions. B. depress interest rates. C. rarely occurred prior to the Reagan Administration. D. stimulate investment spending by businesses. E. are always undesirable.
The mathematics of amortization for mortgage loans must utilize the
A. payment frequency. B. payment frequency and the period of time over which the debt will be repaid. C. period of time over which the debt will be repaid. D. structure of marginal tax rates.