📚 Learning Guide
Specialization and Trade
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If a country specializes in producing a good for which it has a comparative advantage, it will always export that good and never import it under any circumstances.

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Learning Path

Question & Answer
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Choose the Best Answer

A

True

B

False

Understanding the Answer

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Answer

The statement is false. Even if a country has a comparative advantage in a good, it may still import that good if domestic demand exceeds its production or if it needs a different quality or variety that it cannot produce efficiently. Trade can also be influenced by policy, tariffs, or strategic reasons, so a country might choose to import a good it can produce at a higher cost. For example, a country that grows rice cheaply could still import rice during a drought when its own harvest is low. Thus, specialization does not guarantee exclusive export and no import of that good.

Detailed Explanation

When a country can make a product much more cheaply, it tends to sell that product to other nations. Other options are incorrect because Some think that being good at a product means a country will never need it again.

Key Concepts

Comparative advantage
Specialization
Trade dynamics
Topic

Specialization and Trade

Difficulty

medium level question

Cognitive Level

understand

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