Multiple Choice
Which of the following best explains how Apple has been able to sustain its competitive advantage in the smartphone industry?
89
views
9. International Trade
Sources of Comparative Advantage
Multiple Choice
Which of the following is a source of comparative advantage in international trade?
A
Uniform opportunity costs across all countries
B
Differences in technology between countries
C
Presence of monopolistic competition in domestic markets
D
Government-imposed price ceilings
Verified step by step guidance1
Understand the concept of comparative advantage: it refers to the ability of a country to produce a good at a lower opportunity cost than another country.
Recognize that comparative advantage arises from differences in opportunity costs, which are often influenced by factors such as technology, resource endowments, and productivity.
Analyze each option in the problem: uniform opportunity costs across countries imply no differences, so no comparative advantage arises from that.
Consider that differences in technology between countries can lead to different productivity levels, thus creating varying opportunity costs and enabling comparative advantage.
Note that factors like monopolistic competition or government-imposed price ceilings affect market structure or prices but do not directly create comparative advantage in production.
Related Videos
Related Practice
