Sources of Comparative Advantage
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Questions and Answers

Which theory assumes relative labor productivity, labor costs, and product prices differ in two countries before trade?

  • Ricardian theory (correct)
  • Leontief Paradox theory
  • Product Cycle theory
  • Industrial Policy theory
  • What does the Ricardian theory rule out, according to the text?

  • Explanation of how trade affects the distribution of income among factors
  • Explanation of why some favor trade while others oppose it
  • Both a and b (correct)
  • None of the above
  • Which theory is based on the assumption of overlapping demands as a basis for trade?

  • Product Cycle theory
  • Intra-Industry Trade theory (correct)
  • Ricardian theory
  • Leontief Paradox theory
  • Which organization rules that illegal government subsidies support Boeing and Airbus?

    <p>World Trade Organization (WTO)</p> Signup and view all the answers

    What does the Ricardian theory assume as the sole factor of production before trade?

    <p>Labor</p> Signup and view all the answers

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