Which of the following statements is TRUE? I. It is virtually impossible for a country to be the low-cost producer of all goods and services. II. The benefits of trade depend on absolute advantage, not comparative advantage. III. A country could have a comparative advantage in producing everything.
A) I and II only
B) I only
C) II only
D) III only

Question

Quizplus · Accepted Answer

Statement I is true because every country has its own strengths and weaknesses, which make it impossible for any country to be the low-cost producer of everything. Statement II is false because the benefits of trade depend on comparative advantage, not absolute advantage. Statement III is false because even if a country has a comparative advantage in producing a wide range of goods and services, it cannot have a comparative advantage in everything.

Which of the Following Statements Is TRUE? I