Comparative advantage has mixed results when it comes to predicting a country's trade patterns. Which of the following is FALSE?
A) There are many potential products an economy might export that use the same comparative advantage.
B) A large share of international trade is not based on comparative advantage.
C) Comparative advantage has proven completely incapable of predicting trade.
D) Comparative advantage is a dynamic concept, which means that the spread of technology, improvement in skills, and learning-by-doing may alter a country's comparative advantage over time.
C
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The upward-sloping character of the labor supply schedule assumes that the ________
A) the substitution effect is equal to the income effect B) the substitution effect is larger than the income effect C) the substitution effect is smaller than the income effect D) the ratio of real wages to the marginal product of labor is equal to the equilibrium nominal wage
The price of lemonade is $0.50; the price of popcorn is $1.00. If Fred has maximized his utility by purchasing lemonade and popcorn, his marginal rate of substitution will be:
A) 2 lemonades for each popcorn. B) 1 lemonades for each popcorn. C) 1/2 lemonade for each popcorn. D) indeterminate unless more information on Fred's marginal utilities is provided.