Question

U.S. agriculture has a comparative advantage in agriculture and so stands to be a big beneficiary if the TPP is enacted. Which statement below is true of the theory of comparative advantageMultiple Choice

a. The focus in the theory of comparative advantage is on exchange rates.


b. Potential world production is greater with unrestricted free trade than it is with restricted trade.


c. The theory of comparative advantage views trade as a zero-sum game.


d. The theory of comparative advantage is superseded by the theory of absolute advantage.


e. Free trade is unequivocally dismissed under the theory of comparative advantage.

Answer 1

The answer is option E)Free trade is unequivocally dismissed under the theory of comparative advantage.

Step-by-step explanation:

Trans-Pacific Partnership (TPP) is a trade and investment agreement under negotiation by 12 Pacific Rim countries, including the United States.

The TPP accounts for 42 percent of the global agricultural exports of the United States and 47 percent of its agricultural imports.

Comparative advantage suggests that countries will engage in trade with one another, exporting the goods that they have a relative advantage in productivity.

Comparative advantage theory was first developed by 19th-century British economist David Ricardo, that attributed the cause and benefits of international trade to the differences in the relative opportunity costs.