If each country specializes in producing those goods in which it has a comparative advantage, then

a. the consumption possibilities for the world will be reduced
b. all countries will have the same standard of living.
c. each country will be self-sufficient
d. rich countries will get richer and poor countries will get poorer
e. world output will be maximized

Question

If each country specializes in producing those goods in which it has a comparative advantage, then

a. the consumption possibilities for the world will be reduced
b. all countries will have the same standard of living.
c. each country will be self-sufficient
d. rich countries will get richer and poor countries will get poorer
e. world output will be maximized

justus · Answer

I am thinking d or c

Isry · Answer

Well it depends on the goods they produce. Sure some might be self sufficient but if a country is known for exporting iron or minerals they’re not going to be self sufficient.

justus · Answer

I understand

Isry · Answer

What course is this for? And what’s the rest of the chapter about?

justus · Answer

The course is microeconomics and this is actually the last chapter it's about International Trade

Isry · Answer

Is it pro or con international trade?

justus · Answer

It describes the concept of comparative advantage and the effects, costs, and benefits of both restricted and unrestricted international trade

justus · Answer

Hmm, justjm do you know what they are talking about?

justjm · Answer

Hypothetical questions have hypothetical answers...perfectly unrestricted free trade is impossible, especially with what's been going on recently.

But to answer this question, I'm not fully sure but I'm kind of centering on E.

A and C are contradictory. Comparative advantage actually gives opportunities to increase consumptions ABOVE the PPC at an instant sometimes. Also, if countries are self-sufficient, there is no utility in free trade.

B and D are kind of ambiguous and you...standard of living and national wealth are not directly dependent on free trade.

E probably seems reasonable. The purpose of comparative advantage is for countries to produce in products where they have the least opportunity costs, and thus maximize productive efficiency.

justus · Answer

I agree with your answers, thank you so much ;) <3

justjm · Answer

@Isry you think you can confirm if E would be an apt choice? It seems like this question looks at free-trade from an advantageous side so E would seem reasonable from that sense as well.

Isry · Answer

Yeah E could work. It’s a super vague question.

justus · Answer

Interesting and thank you for the confirmation ill go with that choice.