The table below gives the maximum amount of rice or cloth that countries and could produce if they fully utilize all the factors of production at their disposal with the best technology available to them :
| Country—A | Country—B | |
|---|---|---|
| Rice (in million tonnes/year) | 50 | 100 |
| Cloth (in million yards/year) | 100 | 300 |
Trade based on comparative advantage would imply
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The table below gives the maximum amount of rice or cloth that countries A and B could produce if they fully utilize all the factors of production at their disposal with the best technology available to them: | Country—A | Country—B | Rice (in million tonnes/year) | 50 | 100 | Cloth (in million yards/year) | 100 | 300 | Trade based on comparative advantage would imply (A) export both rice and cloth (B) export rice and import cloth (C) import both rice and cloth (D) export cloth and import rice
Theories of international trade has come up 151 times in 6 exams since 2006.
This question is on Absolute and comparative advantage, part of Theories of international trade in International Economics.
Why countries trade: producing more cheaply in absolute terms, or at lower opportunity cost.
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Question from the JNU SIS 2017 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.