Economic theory states that losing a comparative advantage at producing one good means creating a comparative advantage at producing another. As an economy transitions from producing one good to producing another good:
A) those who must transition from the production of one good to the production of another good may find the transition difficult in the short run.
B) the transition can be seen as a success in the short run.
C) outsourcing will always be good for every member of a society.
D) no one will complain in the short run, but in the long run people may not like the transition.

Question

Quizplus · Accepted Answer

Economic theory states that losing a comparative advantage at producing one good means creating a comparative advantage at producing another. However, the transition from producing one good to producing another may be difficult in the short run for those who must transition. Therefore, option A is the correct choice. Option B, outsourcing will not always be good for every member of society, so option C is incorrect. Option D is also incorrect as people may complain in the short run as well as the long run.

Economic Theory States That Losing a Comparative Advantage at Producing