According to the Application, if Latvia has no absolute advantage relative to its neighboring European y countries, should it still trade with its neighbors?
A. Yes, it should specialize in timber because it has comparative advantage in it.
B. Yes, it should specialize in livestock because it has comparative advantage in it.
C. Yes, it should specialize in grain because it has comparative advantage in it.
D. No, it should not specialize in anything, and it should just trade with countries outside its neighboring European countries.
Answer:A
According to the Application, if Latvia has no absolute advantage relative to its neighboring European y countries, should it still trade with its neighbors?
A. Yes, it should specialize in timber because it has comparative advantage in it. B. Yes, it should specialize in livestock because it has comparative advantage in it. C. Yes, it should specialize in grain because it has comparative advantage in it. D. No, it should not specialize in anything, and it should just trade with countries outside its neighboring European countries.