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CFA Level 1
Economics

Understanding Comparative Advantage in International Trade

Easy International Economics International Trade

As countries engage in international trade, they often specialize in the production of goods and services in which they have a comparative advantage. Comparative advantage is defined as the ability of a country to produce a particular good at a lower opportunity cost than another country. This concept plays a crucial role in international trade theories and helps explain the benefits of trade between nations.

Given the information about comparative advantage, consider the following statement:

"A country with a comparative advantage in producing a specific good will always export that good and import goods for which it has a comparative disadvantage."

Based on this statement, which of the following statements is true?

Hint

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