Answers will vary but should include the idea of exposure to risk. Even with a marked comparative advantage over other countries, a country that specialized in just one product would be exposed to a great deal of risk. For example, if a country specialized only in soybean production, but an infestation or weather event destroyed the crop, then the country would have no other product to bring to market, and its economy would be devastated.
What will be an ideal response?
capital and technological resources. By using their respective resources to their best advantage, the two areas will produce different goods (e.g., clothing or cotton in one area and vehicles or computers in the other) that can then be traded, increasing the number of goods overall that are supplied to consumers in the two areas.
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Assume that there are two parties to an exchange and that they value the goods they would receive as much as the goods they would give away. What do economists call this?
a. A coincidence of coinage b. A coincidence of wants c. An exchange d. Transactions costs e. An alignment of barter
The determination of the nation's money supply is called:
A. monetary policy. B. trade policy. C. fiscal policy. D. structural policy.
Most of the Fed's income is:
A. paid to member banks in the form of a dividend. B. used to build the Fed's portfolio of securities. C. sent to the FDIC to shore up the depositor insurance fund. D. returned to the U.S. Treasury.
Which of the following countries experienced the lowest level of output per capita in 2011?
A) United States B) France C) Japan D) United Kingdom