Improvements in productivity may lead to decreasing comparative costs if
A) the assumption of fixed technologies under constant costs is relaxed.
B) technologies available to each nation are maintained the same.
C) resource endowments do not vary.
D) comparative advantage does not change.

Question

Quizplus · Accepted Answer

Improvements in productivity may lead to decreasing comparative costs if the assumption of fixed technologies under constant costs is relaxed. This allows for changes in the technology used in production, which can lead to improvements in productivity and decreased costs for producing goods, potentially changing comparative advantage between countries.

Improvements in Productivity May Lead to Decreasing Comparative Costs If