Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It encourages countries to produce goods in which they have a lower opportunity cost, leading to reduced trade barriers.
B
It makes countries focus on self-sufficiency, resulting in increased trade barriers.
C
It suggests that all countries should trade equally, thereby eliminating any trade barriers.
D
It has no effect on market exchange or trade barriers.
Understanding the Answer
Let's break down why this is correct
Answer
Comparative advantage is the idea that countries should focus on producing goods and services that they can make most efficiently compared to others. This means that each country can specialize in what they do best, leading to more efficient production and lower costs. For example, if Country A is great at making cars but not as good at growing coffee, while Country B excels at growing coffee but struggles with car production, it makes sense for Country A to focus on cars and Country B on coffee. When countries trade these specializations, both can benefit from lower prices and greater variety of products. If trade barriers like tariffs or quotas are high, it can limit the benefits of this specialization by making goods more expensive, which ultimately affects the overall efficiency of the market.
Detailed Explanation
Comparative advantage means countries should focus on making things they can produce cheaply. Other options are incorrect because Some might think countries should be self-sufficient and not trade; This option suggests all countries should trade the same amount.
Key Concepts
comparative advantage
market exchange
trade barriers
Topic
Benefits of Specialization and Trade
Difficulty
hard level question
Cognitive Level
understand
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