Question

In​ 2015, one of the largest multilateral trade deals in history was struck​ (but not ratified at the time of​ writing) by negotiators representing 12 countries​ (Australia, Brunei​ Darussalam, Canada,​ Chile, Japan,​ Malaysia, New​ Zealand, Peru,​ Singapore, the United​ States, and​ Vietnam). The TransPacific​ Partnership, or​ TPP, will dramatically reduce trade barriers between countries accounting for about 40 percent of the​ world's economy. Some opponents of the deal argue that there is no way for Canada to benefit from trade with developing countries like​ Vietnam, as Canada is more productive​ (has an absolute advantage LOADING... ​). Is there any way for Canada to gain from trading with a country over which we have an absolute advantage in virtually​ everything? A. Since Canada has an absolute​ advantage, it had more bargaining power and could gain from importing products from developing​ countries, regardless of the absolute advantage. B. Even with an absolute​ advantage, Canada could benefit from importing products for which the developing country has the same opportunity cost. C. Even with an absolute​ advantage, Canada could benefit from importing products for which the developing country has produced at a lower total cost. D. Since Canada had an absolute​ advantage, it also had a comparative advantage in each industry and would not have anything to gain from importing products from a developing country. E. Even with an absolute​ advantage, Canada could benefit from importing products from a developing country as long as that country has a comparative advantage.

Answer 1

Solution is E.

Because Canada can trade and benefit from. Nation which has comparative advantage. Since as per Ricardo theory what matters is relative efficiency in production which comprises of better quality, faster delivery etc.