Principle of Comparative Cost Advantage And Its Limitations - SS3 Economics Past Questions and Answers - page 1
1
What is the principle of comparative cost advantage?
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A
The idea that countries should specialize in producing goods they are good at producing
B
The idea that countries should produce everything they need domestically
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C
The idea that countries should produce only what they are efficient at producing
D
The idea that countries should import all goods they need
2
What is one of the benefits of the principle of comparative cost advantage?
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A
It enables countries to access a wider variety of goods and services
B
It encourages countries to produce everything they need domestically
C
It leads to decreased productivity and economic growth
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D
It promotes unequal distribution of gains between countries
3
What does the principle of comparative cost advantage assume about resources within a country?
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A
That resources are freely mobile between different sectors
B
That resources are scarce and should be preserved
C
That resources can only be used for one sector of production
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D
That resources are abundant and can be used for any sector of production
4
What can differences in technology and infrastructure between countries affect?
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A
The viability of comparative cost advantage
B
The uniformity of production costs across countries
C
The equal distribution of gains between countries
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D
The need for trade restrictions between countries
5
What can comparative cost advantage lead to in terms of gains between countries?
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A
Unequal distribution of gains
B
Equal distribution of gains
C
Increased political tensions and trade disputes
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D
Decreased productivity and economic growth
6
What is the main idea behind the principle of comparative cost advantage?
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7
What are some limitations of the principle of comparative cost advantage?
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