Learning Path
Question & Answer
Choose the Best Answer
Country A specializes in electronics and trades with Country B, which specializes in agriculture, leading to lower prices for consumers in both nations.
Country C imposes high tariffs on imported textiles to protect its domestic industry from foreign competition.
Country D decides to become self-sufficient, producing all goods domestically without engaging in trade.
Country E and Country F agree to a trade deal that results in increased tariffs on each other's goods.
Understanding the Answer
Let's break down why this is correct
When each country focuses on what it produces best, they can exchange goods. Other options are incorrect because The idea that high tariffs protect jobs ignores that taxes make imported goods more expensive; Not trading means a country must produce every item itself, missing cheaper or better options from others.
Key Concepts
Specialization and Trade
medium level question
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Deep Dive: Specialization and Trade
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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.
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