According to the theory of comparative advantage, which of the following is not a reason why countries trade A
Answers
Answer:
According to the theory of comparative advantage, which of the following is not a reason why countries trade A
Explanation:
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Correct question:
According to the theory of comparative advantage, which of the following is not a reason why countries trade
a)The productivity of labour differs across countries and industries
b)Exports give a country a political advantage over other countries that exports less
c)Prices are lower in one country than in another
d)Costs are higher in one country than in another
Answer:
The reason the countries doesnot trade according to the theory of comparitive advantage is the productivity of labour differ across countries and industries.
Comparative advantage:
The ability of an economy to produce a specific good or service at a lower opportunity cost than its trading counterparts is known as comparative advantage.
The correct answer is option (a)
The productivity of labour differs across countries and industries doesnot become a reason to not trade in a country according to the theory of comparative advantage
The incorrect answer option (b)
It is true that exports give a country a political advantage over other countries that exports less.So, for a country which needs power or in power choose to trade on other countries and invest and interfere in the countries politics.
The incorrect answer option (c)
If the prices are lower in one country than in another,then trading with the country is economical so it is a good reason to trade with a country.
The incorrect answer option (d)
If the Costs are higher in one country than in another then the demand for the products will be increases then exporting from other countries is needed .hence this is also one of the reason of trading between countries.