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