If there are high transportation costs
A)the terms of trade will also be high
B)the result could be incomplete specialization
C)large countries will have an advantage in trading with small countries
D)small countries will have an advantage in trading with large countries
E)trade will be based on absolute advantage rather than comparative advantage

Question

Quizplus · Accepted Answer

High transportation costs can make it difficult for countries to fully specialize in the production of goods for which they have a comparative advantage. This can lead to incomplete specialization, where countries may produce some goods domestically and import others, even if they could produce those goods more efficiently themselves. Incomplete specialization can limit the potential gains from trade.

If There Are High Transportation Costs