Advantage posits that when Country A can make both wine and bread more efficient

Question

Advantage posits that when Country A can make both wine and bread more efficiently than Country B, but can make wine much more efficlently than bread then only wine while 8 produces only bread. A would import all its bread from County B by exporting some of the excess wine and this will make both countries bettor of B.Country B should produce more wine to seifkcould o port to Coury A C Country A should produce bread only and import wine from Country B by exporting the exra bread D.Country A cannot gain anything by trade and should not worry Reset Selecticn Mark for Review What's This Question 2 of 25 10 Point Hecksher-OhNlin trade theory explains the pattem of trade by highlighting which of the following A.Absolute Advantage B. The amount of goid in the country's central bank C Factor Proportions D.Comparative Advantage Reset Selection Mark for Review what,Th 0 Points Question 3 of 25 What do we mean by Economic Development? A.Growth of population whout growth of income B Rapid economic growth in the mining sector C Staring a new shopping mall project in town D.Overal improvement in the standand of living of the general population Mark for Review What's Tha 10 Ponts Question 4 of 25 PDI stands for A Forsign Direct Investment B Federai Distriet of Indana. C Foreign Development Interest OFederal Deposit Inurance Corporation

Explanation / Answer

(1) (A)

A country has comparative advantage in a good which it can produce at a lower opportunity cost (more efficiently) than the other country can. As per law of comparative advantage, a country will specialize in and export than good in which it has comparative advantage and will import the other good.

(2) (C)

H-O theory states that a country will specialize in that good which uses its abundant factor intensively. So a labor abundant country specializes in and exports the labor intensive good an a capital abundant country specializes in and exports the capital intensive good.

(3) (D)

Economic growth measures growth of income while economic development includes the improvement in standard of living too.

(4) (A)

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