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The Principle of Comparative Advantage Maintains That

Question 25

Multiple Choice

The principle of comparative advantage maintains that


A) instituting trade restrictions, such as nontariff barriers, is an effective way to gain a comparative advantage in certain trade sectors, such as manufactured goods.
B) a state should specialize in producing those goods it can produce comparatively cheaply and trade them for goods in which others enjoy a comparative advantage.
C) it is comparatively cheaper to protect new domestic industries than to allow them to be destroyed by competition from more established industries in other states.
D) because security issues or other "high politics" issues have more public interest, they have a comparative advantage over "low politics" issues when competing for attention from policy makers.
E) states should encourage trade with nations that have a similar government structure because they would have a comparative advantage in global trade negotiations.

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