The trade patterns shown on the map above depict which of the following economic concepts?

• A. Comparative advantage between nations
• B. Monopolistic competition in local markets
• C. Price elasticity of demand for a single good
• D. The law of diminishing marginal utility

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the concept of comparative advantage, which refers to the ability of a country to produce a good or service at a lower opportunity cost than another country.
2. Step 2: Recognize that trade patterns between nations typically illustrate how countries specialize in producing goods where they have a comparative advantage, leading to mutually beneficial trade.
3. Step 3: Contrast this with other options: monopolistic competition relates to market structure within a single market, price elasticity of demand concerns responsiveness of quantity demanded to price changes for a single good, and the law of diminishing marginal utility deals with consumer satisfaction decreasing as more units are consumed.
4. Step 4: Conclude that the map showing trade patterns between countries is best explained by the concept of comparative advantage, as it highlights specialization and exchange based on relative efficiencies.
5. Step 5: To confirm, analyze the trade flows on the map to see if countries export goods they produce relatively efficiently and import goods that are relatively costly for them to produce, which aligns with comparative advantage theory.