Asked by
Alexis Ramsey
on Dec 11, 2024
Verified
Which of the following is an implication of the law of comparative advantage?
A) Countries with small amounts of labor relative to capital should specialize in producing labor-intensive commodities.
B) Since workers in high-income countries utilize larger amounts of capital than workers in less developed nations, trade between capital-rich and capital-poor nations results in the exploitation of labor in the less developed countries.
C) Countries that are high cost producers of agricultural products should trade those products for goods they can produce only at a low opportunity cost.
D) Countries that are low opportunity cost producers of timber products should trade those products for goods they can produce only at a high opportunity cost.
Comparative Advantage
The ability of an individual, company, or country to produce a good or service at a lower opportunity cost than competitors.
Opportunity Cost
The cost of foregone alternatives when a decision is made, representing the benefits that could have been gained by choosing the next best alternative.
Labor-intensive
Refers to a type of industry or process that requires a large amount of human labor to produce goods or services, as opposed to being heavily automated.
- Understand the principle of the law of comparative advantage.
- Describe the implications of private ownership and free exchange.
Verified Answer
BH
Learning Objectives
- Understand the principle of the law of comparative advantage.
- Describe the implications of private ownership and free exchange.