Practice question · Multiple choice
A brilliant surgeon types faster than her receptionist and still hires one. Which trade principle is that, in miniature?
Hints
- What does the surgeon give up during an hour of typing? What does the receptionist give up?
- Compare opportunity costs, not speeds.
Show the answer
D. Comparative advantage, since her hour is worth more in surgery
Why
The comparison that matters is what each forgoes, not what each can do, an hour of the surgeon's typing costs an operation. Ricardo's result scales the same way for countries, which is why 'they are better at everything' is never an argument against trade.
Practise International Trade
The app has 6 more questions on this lesson, and keeps your place in the course. Business I is free to start.
More questions on International Trade
- Which statements about a trade deficit are correct?
- A country worse at producing everything than its partner still gains from trade. What makes that possible?
- Order the chain from specialization to shared gains.
- Sort each trade barrier by its type.
- Match each group to how a new import tariff affects it.
- A country is _less productive than its neighbor at everything_. What does trade theory conclude?