Question 25 Economists favor free trade based on the theory of comparativelabsolute advantage, which recommends specialization and trade to increase world output. Are there real-life problems with this theory Oa. Yes. Countries may not want to depend on others for important items. O b. No. This theory means we miss out on the benefits of trade wars, which is a big loss. Oc. Both "yes" answers are correct. Od. Yes. Specialization can be risky, so diversification may be safer.

Question 25 Economists favor free trade based on the theory of comparativelabsolute advantage, which recommends specialization and trade to increase world output. Are there real-life problems with this theory Oa. Yes. Countries may not want to depend on others for important items. O b. No. This theory means we miss out on the benefits of trade wars, which is a big loss. Oc. Both "yes" answers are correct. Od. Yes. Specialization can be risky, so diversification may be safer.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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5. Free-trade benefits In addition to the positive welfare effects that free trade has on an economy, there are a variety of other benefits of international trade. Consider the following scenario: Because of international trade, poorer countries are able to learn about technological advances made by other countries rather than investing scarce resources in developing advanced technology themselves. The previous scenario represents which of the following benefits of free trade? O Increased variety of goods O Increased competition O Lower costs through economies-of scale O An enhanced flow of ideas
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If China can produce cars at a lower cost than America using all Chinese-made parts, it has a comparative advantage rather than an absolute advantage. O True False
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Q32 A country that engages in no foreign trade is said to be in a situation of... a. Reciprocal absolute advantage. b. Absolute advantage. c. Comparative advantage. d. Economic empowerment. e. Autarky. Clear my choice
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