Asked by
Chesca De Guzman
on Dec 11, 2024
Verified
Refer to Table 2-2. According to the law of comparative advantage, both Honduras and Nicaragua could gain if
A) Honduras produced all of the apples and oranges and Nicaragua did not produce anything.
B) Honduras specialized in producing apples, Nicaragua specialized in producing oranges, and they traded.
C) Honduras specialized in producing oranges, Nicaragua specialized in producing apples, and they traded.
D) Nicaragua and Honduras were both were self-sufficient and did not trade.
Comparative Advantage
Refers to the ability of a country or individual to produce a particular good or service at a lower opportunity cost than its trading partners.
Specialized
Having expertise or focusing on a specific area of knowledge, function, or skill.
Trade
The exchange of goods and services between individuals or entities, often in different countries or economies.
- Acquire knowledge on the principle behind the law of comparative advantage.
- Become aware of the advantages linked to trading activities and skilled expertise.
Verified Answer
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Learning Objectives
- Acquire knowledge on the principle behind the law of comparative advantage.
- Become aware of the advantages linked to trading activities and skilled expertise.