The principle of comparative advantage suggests that a country should specialize in producing and exporting goods and services that it can produce more efficiently than other countries, while importing goods and services that it cannot produce as efficiently. Therefore, a country should focus on exporting goods in which it has a comparative advantage.

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A Country

Question 18

Multiple Choice

A country

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

Correct Answer: