Which statement does NOT accurately outline an implication of our model of trade?
A) Trade allows for specialization.
B) Trade is good for nations.
C) Trade is based on comparative advantage.
D) Trade can only occur if the cost of labour in both countries is equal

Question

Quizplus · Accepted Answer

This statement is incorrect as trade can occur even if the cost of labour in both countries is not equal. Trade is based on comparative advantage which means that each country specializes in producing the goods and services that they can produce efficiently and at a lower opportunity cost. Therefore, even if the cost of labour is not equal, trade can still occur as long as each country can produce something that the other country wants or needs.

Which Statement Does NOT Accurately Outline an Implication of Our