National comparative advantage arises from the difference in across countries op

Question

National comparative advantage arises from the difference in across countries opportunity cost population the money cost of production technology If country A has a comparative advantage in the production of automobiles and country B has a comparative advantage in the production of boats. only one country will gain and that country is the one that has the lowest wage rates only one country will gain, and that country is the one that uses the most up-to-date technology both countries will gain if country A exports automobiles to country B and country B exports boats to country A both countries will gain if country B exports automobiles In country A and country A exports boats to country B

Explanation / Answer

1.

National comparative advantage arises from the differences in: (a) opportunity cost

Reason: Comparative advantage occurs when one country has lower opportunity cost of production than other country, giving it an edge over the latter.

2.

If country A has a comparative advantage in the production of automobiles and country B has a comparative advantage in the production of boats: (c) Both countries will gain if country A exports automobiles to country B and country B exports boats to country A.

Reason: Since A has comparative advantage in automobiles, it should only produce automobiles and export to B which will produce only boats and export them to A.

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