Which of the following phenomena can be explained by the simple comparative advantage theory?
A) A country that has a vast amount of farmland tends to export agricultural goods.
B) A country with little skilled labor tends to export highly technical goods.
C) A country tends to import the goods that it can produce at a lower opportunity cost.
D) A country imports and exports the same goods.

Question

Quizplus · Accepted Answer

According to the simple comparative advantage theory, a country will export goods that it can produce more efficiently (at a lower opportunity cost) than other countries. A country with a vast amount of farmland is likely to have a comparative advantage in agricultural goods, leading it to export them.

Which of the Following Phenomena Can Be Explained by the Simple