Wednesday, February 10, 2010

Can someone tell me if these statements are true or false?

- ';Two countries can achieve gains from trade even if one of the countries has an absolute advantage in the production of all goods';





- Certain very talented people have a comparative advantage in everything they do';





- ';If a certain trade is good for one person, it can't be good for the other one';





- ';If trade is good for a country, it must be good for everyone in the country';Can someone tell me if these statements are true or false?
1. True. (This is the Ricardian idea of comparative advantage. Adam Smith would have argued that this is false because he only considered absolute advantage, but Ricardo adjusted this theory to create comparative advantage. Comparative advantage is the idea that production is based on opportunity costs within the country).


2. False. (Comparative advantage is just that, a comparison of opportunity costs of the production of two goods. You can't be comparatively better at producing A if you're actually comparatively better at producing B, because these opportunity costs are based on each other.)


3. False. (Using the theory of comparative advantages; two countries, one with absolute advantage in all things and one with no absolute advantages is still better off because of trade and having a comparative advantage in one good within its country.


4. False. (If the elite are capitalists they may be hoarding all of the profits which leaves labor unimproved)Can someone tell me if these statements are true or false?
1. T


2.F


3.F


4.F.
1. true


2. false


3. false


4. false
  • ie
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