Which statement is FALSE?
A. If the U.S. can produce rice more efficiently than Japan can, the U.S. enjoys an absolute advantage.
B. Economists dislike both tariffs and import quotas.
C. Under the law of comparative advantage, total output is greatest when each product is made by the country that produces it most efficiently.
D. No nation will engage in trade with another nation unless it will gain by that trade.
is it C?
The false statement is D. "No nation will engage in trade with another nation unless it will gain by that trade." Although trade is generally beneficial for nations, there may be cases where a nation engages in trade even if it does not directly gain from it. Other factors such as diplomatic relationships, strategic alliances, or political considerations can influence trade decisions.
To determine which statement is false, let's analyze each statement:
A. If the U.S. can produce rice more efficiently than Japan can, the U.S. enjoys an absolute advantage.
This statement is true. If one country can produce a good with fewer resources or at a lower cost compared to another country, then it has an absolute advantage in producing that good.
B. Economists dislike both tariffs and import quotas.
This statement is true. Economists generally agree that tariffs and import quotas distort free trade, restrict consumer choices, and can lead to retaliatory actions from other countries.
C. Under the law of comparative advantage, total output is greatest when each product is made by the country that produces it most efficiently.
This statement is true. According to the law of comparative advantage, countries should specialize in producing goods in which they have a lower opportunity cost, allowing for greater efficiency and increased total output.
D. No nation will engage in trade with another nation unless it will gain by that trade.
This statement is false. While it is generally beneficial for countries to engage in trade due to the potential for mutual gains, there can be situations where one country engages in trade even if it does not gain directly. It could be for political, strategic, or other non-economic reasons.
Based on the analysis, statement D is false.