Comparative advantages

What is comparative advantage?

• Producing goods at the highest cost

• Producing goods at the lowest opportunity cost

• Producing more goods than other countries

• Producing goods without any cost

Which country has a comparative advantage in coffee production?

• Japan

• Germany

• Brazil

• Canada

What is a benefit of comparative advantage?

• Decreased exports

• Increased costs

• Specialization in production

• Reduced competition

Comparative advantage leads to what economic outcome?

• Economic stagnation

• Economic decline

• Economic isolation

• Economic growth

Which of the following is a challenge of comparative advantage?

• Dependency on international markets

• Decreased national income

• Unlimited resources

• Increased local consumption

Why might over-reliance on one industry be risky?

• It makes the economy stable

• It makes the economy vulnerable to external shocks

• It guarantees constant growth

• It reduces environmental impact

Which of these is an example of a natural comparative advantage?

• Advanced technology

• Abundant natural resources

• High levels of education

• Strong legal system

What can happen to resources when a country specializes too much?

• Resources multiply

• Resources are preserved

• Resources remain unused

• Resource depletion

How does comparative advantage affect international trade?

• Decreases trade

• Increases trade efficiency

• Stops trade agreements

• Increases trade barriers

Which sector might a developing country specialize in due to comparative advantage?

• High-tech manufacturing

• Low-cost agriculture

• Luxury goods production

• High-cost services