A country exports those goods in which it has a comparative advantage, meaning it can produce and sell these goods at a lower opportunity cost than other countries. This allows the country to specialize in producing these goods and trade with other countries for goods that it may not be as efficient in producing. By doing so, both countries can benefit from the trade and increase their overall welfare.

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A Country

Question 12

Multiple Choice

A country

A) imports those goods in which it has a comparative advantage.
B) exports those goods in which it has a comparative advantage.
C) imports goods produced in countries with lower wage rates.
D) exports goods produced by domestic industries with low wages relative to its trading partners.
E) exports those goods in which it has an absolute advantage.

Correct Answer: