Which of the following is not true about the differences between comparative advantage and absolute advantages?...
Which of the following is not true about the differences between comparative advantage and absolute advantages?
| a. |
If each country has an absolute advantage in one of the goods, then they should each specialize in the good in which they have an absolute advantage. |
|
| b. |
In order to achieve gains from trade, specialization should be based on comparative advantage and not absolute advantage. |
|
| c. |
In the two nation, two good model, we will always see that a country will have a comparative advantage in at least one good. |
|
| d. |
In a two good, two country model we will always have that each country will have absolute advantage in at least one of the two goods. |
Homework Answers
the following is not true about the differences between comparative advantage and absolute advantages:-
-if each country has an absolute advantage in one of the goods, then they should each specialize in the good in which they have an absolute advantage
option(A)
Reason-They should specialize in the good in which they have a comparative advantage in.
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