If the autarky price of S (in terms ofT)were lower in country A than in country B,
A)A has a comparative advantage in S.
B)B has a comparative advantage in T.
C)A has a comparative disadvantage in T.
D)All of the above.

Question

Quizplus · Accepted Answer

In international trade theory, if the autarky (self-sufficiency) price of a good (S) is lower in one country (A) than in another (B), it indicates that country A can produce S more efficiently relative to T than country B can. This means A has a comparative advantage in producing S (A), which implies B must have a comparative advantage in producing the other good (T) (B), and consequently, A has a comparative disadvantage in producing T (C). Therefore, all of the statements are correct.

If the Autarky Price of S (In Terms OfT)were Lower