The following are potential outcomes attainded by Specialization and Trade (S&T)

ID: 1226479 • Letter: T

Question

The following are potential outcomes attainded by Specialization and Trade (S&T) based on Comparative Advantage, EXCEPT:

Question 8 options:

A) An economy that is Labor Abundant will tend to have C.A. in the type of production that is Labor Intensive.

B) S&T based on Comparative Advantage will lead to efficiency in production.

C) Large economies cannot benefit from S&T based on Comparative Advantage.

D) S&T based on Comparative Advantage allows for a pareto optimal outcome, such that no one is made worse off.

Ans: Large economies cannot benefit from S&T based on Comparative Advantage.

Explanation: Because large countries will have terms of trade near the opportunity costs of the small country.

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