Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Both countries will produce the same goods regardless of efficiency.
B
Economic efficiency ensures that each country focuses on the production of goods where they hold a comparative advantage, enhancing overall market dynamics.
C
Market dynamics are unaffected by the comparative advantages of the countries involved.
D
Economic efficiency is achieved when countries produce goods equally, leading to market imbalance.
Understanding the Answer
Let's break down why this is correct
Answer
In a market where two countries specialize based on comparative advantage, economic efficiency increases because each country focuses on producing goods they can make at a lower opportunity cost. This means that instead of trying to produce everything, each country makes what they are best at and trades for the rest. For example, if Country A is better at making cars and Country B is better at producing wheat, Country A will produce more cars, while Country B will produce more wheat. When they trade, both countries end up with more cars and wheat than if they tried to produce both goods on their own. This specialization and trade allow resources to be used more effectively, leading to greater overall economic efficiency.
Detailed Explanation
When countries focus on what they do best, they use their resources wisely. Other options are incorrect because This idea suggests that countries will make the same things no matter what; This option implies that trade doesn't change anything.
Key Concepts
economic efficiency
market dynamics
Topic
Comparative and Absolute Advantage
Difficulty
medium level question
Cognitive Level
understand
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