Learning Path
Question & Answer
Choose the Best Answer
Country A specializes in producing coffee while Country B focuses on manufacturing electronics, both benefiting from trade.
Country A imposes tariffs on all goods from Country B, hindering trade.
Both countries produce the same goods equally well without trading.
Country A and Country B both decide to produce only agricultural products.
Understanding the Answer
Let's break down why this is correct
When a country focuses on producing a good it can make more cheaply, it saves time and money. Other options are incorrect because Tariffs do not show comparative advantage; they actually block trade and hurt both economies; Doing the same work in both countries does not create a trade advantage.
Key Concepts
Specialization and Trade
medium level question
understand
Deep Dive: Specialization and Trade
Master the fundamentals
Definition
Specialization and trade refer to countries focusing on producing goods they have a comparative advantage in and trading with other countries. This concept allows nations to benefit from producing efficiently and trading for goods they cannot efficiently produce, leading to overall economic growth and welfare improvements.
Topic Definition
Specialization and trade refer to countries focusing on producing goods they have a comparative advantage in and trading with other countries. This concept allows nations to benefit from producing efficiently and trading for goods they cannot efficiently produce, leading to overall economic growth and welfare improvements.
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.