Which of the following statements is true about comparative advantage?
a. Comparative advantage exists whenever one person, firm, or nation can do something at higher opportunity costs than some other individual, firm, or nation.
b. Comparative advantage is interesting theoretically, but it is not relevant when evaluating real-world economic conditions.
c. Low income countries cannot possibly have a comparative advantage in the production of any good or service because of the relatively low literacy rate.
d. Comparative advantage exists whenever one person, firm, or nation can do something at lower opportunity costs than some other individual, firm, or nation.
e. Only technologically advanced economies can have a comparative advantage in the production of a good or service.
d
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According to Robert Solow, the production function should be written as
A) Y = F(K, L, A). B) Y = F(K, L). C) Y = F(A, L). D) Y = F(K, A).
In the figure above, Sam originally selects his consumption bundle at point A with 3 pounds of olives and 4 pounds of pickles a year
Then the price of pickles rises and the price of olives falls so that his budget line rotates but it still goes through point A. Sam's consumption of olives A) definitely will rise. B) definitely will fall. C) definitely will stay the same. D) could rise, fall, or stay the same.