Question

When the country of Matu trades with the country of Balor, Matu experiences a gain because of the high costs of its products while Balor experiences a loss because it is trading small amounts of products that cost very little. Which characteristic of the mercantilist theory does this reflect?

Answer 1

Answer: In order to answer this, we must first add the options. They are as follows:

A. Late-mover advantage

B. First-mover advantage

C. Comparative advantage

D. Factor endowments

E. Zero-sum game

The correct answer is E. Zero-sum game

Explanation: Mercantilism is a concept in which the government of a nation develops an economic policy which will make the country maximize its exports and minimize its imports.

In order words, it can be said to be a concept in which a country profits off the loss of another country.

In Zero-sum game theory, party A's losses are perfectly balanced by party B's gains. In order words party B is profiting off party A.

A clear example of this is when empires impoverished their colonies in order to enrich, build, and develop the economy and infrastructure of the empire.

Therefore, the scenario above reflects the Zero-sum game characteristic of the Mercantilist Theory.

Answer 2

the characteristics reflected here is the idea that a nation's wealth can best be judged by the amount of bullion or precious metals the country has.

Step-by-step explanation:

Mercantilist is a theory that explains that Commerce is important to the progress of every nation and it can be attained at the expense of the interest of another nation.

The characteristics of mercantilism are:

• the idea that the amount of wealth in the world is relatively static

• the idea that a nation's wealth can best be judged by the amount of bullion or precious metals the nation has.

• the need to encourage exports over import.

When the country of Matu and Balor trade together and Matu gains more because of the high cost of its good while Balor traded at a loss because it products cost little, the characteristics reflected here is the idea that a nation's wealth can best be judged by the amount of bullion or precious metals the nation has.

A country will be richer if its good has a high price unlike countries that have goods which possesses low value.