Georgia Assessments for the Certification of Educators GACE Practice Test

According to standard economic theories, countries that have a comparative advantage in the production of cotton should:

1. Export another product, and import cotton

2. Export cotton, and import other products

3. Implement tariffs to protect their domestic cotton industry

4. Work hard to reduce their comparative advantage and diversify their economy

The correct answer is: Export another product, and import cotton

Countries that have a comparative advantage in the production of cotton should export another product and import cotton (Choice A) because the concept of comparative advantage suggests that a country should specialize in the production of goods in which it has a lower opportunity cost. This means that the country can produce a larger quantity of cotton per unit of resources compared to other countries, allowing it to trade internationally and increase its overall economic welfare. Choice B is incorrect because it suggests that the country should export cotton and import other products, which would not align with the principle of comparative advantage. Choice C is incorrect because implementing tariffs to protect the domestic cotton industry would go against the concept of free trade, which is essential for countries to benefit from their comparative advantage. Choice D is incorrect because reducing their comparative advantage and diversifying their economy would decrease the country's overall efficiency and potentially harm its economy.