Comparative advantage has mixed results when it comes to predicting a country's trade patterns.Which of the following is FALSE?
A)There are many potential products an economy might export that use the same comparative advantage.
B)A large share of international trade is not based on comparative advantage.
C)Comparative advantage has proven completely incapable of predicting trade.
D)Comparative advantage is a dynamic concept, which means that the spread of technology, improvement in skills, and learning-by-doing may alter a country's comparative advantage over time.

Question

Quizplus · Accepted Answer

While comparative advantage may have some limitations in predicting trade patterns, it is not completely incapable of doing so. Option C is therefore false. Options A, B, and D are all true statements about comparative advantage.

Comparative Advantage Has Mixed Results When It Comes to Predicting