9. If an economist develops a theory about international trade based on the assu

Question

9. If an economist develops a theory about international trade based on the assumption that there are only two countries and two goods, what is most likely? A. The theory can be useful in the classroom, but has no use in the real world. B. The theory can be useful only in situations involving two countries and two goods. O c. The theory can be useful in helping economists understand the complex world of international trade involving many countries and many goods D. It is a total waste of time, since the actual world has many countries trading many goods

Explanation / Answer

The answer is "C",

Ricardian theory of comparative advantage which the whole world follows for international trade also takes an assumption of two countries and two goods, only to simplify thing.

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