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PPF - Comparative Advantage and Absolute Advantage
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PPF - Comparative Advantage and Absolute Advantage
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2. Introductory Economic Models / PPF - Comparative Advantage and Absolute Advantage / Problem 5
Problem 5
Why does comparative advantage lead to gains from trade?
A
It allows countries to specialize in goods where they have a lower opportunity cost, increasing overall efficiency.
B
It eliminates the need for international trade.
C
It guarantees that all countries will have an absolute advantage.
D
It ensures that all countries produce the same amount of goods.
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