Question

Comparative advantage shows that just by rearranging who does what we can produce more stuff through specialization and trade, even if no one gets any better at any line of work.

(a).true
(b).false

Answer 1

Comparative advantage is true as it allows for an increase in global output and consumption when countries specialize in goods where they have a lower opportunity cost.

Step-by-step explanation:

The statement 'Comparative advantage shows that just by rearranging who does what we can produce more stuff through specialization and trade, even if no one gets any better at any line of work' is true. Comparative advantage allows countries to benefit from trade by focusing on the production of goods for which they have a lower opportunity cost, leading to increased global output. For instance, if Brazil specializes in producing beef and the United States specializes in producing autos, they can trade these goods with one another, increasing total world production and allowing higher levels of consumption. Tables that compare the output before and after specialization and trade, such as Table 19.6 and Table 33.6 in the provided text, illustrate these increases in global output as a result of countries following their comparative advantage and engaging in trade.