Argonia and Selenia have specialized in the production of industrial equipment and pharmaceuticals respectively. Argonia exports industrial equipment to Selenia, which in turn exports chemicals and medicines to Argonia. According to the theory of comparative advantage, this mutually beneficial trade relationship best illustrates:A. the significance of trade barriers. B. a positive-sum game. C. a first-mover advantage. D. the advantages of mercantilism. E. a zero-sum game.

Question

Gabrielle

Business

13 August, 18:56

Argonia and Selenia have specialized in the production of industrial equipment and pharmaceuticals respectively. Argonia exports industrial equipment to Selenia, which in turn exports chemicals and medicines to Argonia. According to the theory of comparative advantage, this mutually beneficial trade relationship best illustrates:A. the significance of trade barriers. B. a positive-sum game. C. a first-mover advantage. D. the advantages of mercantilism. E. a zero-sum game.

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Answers (1)

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Lena Wilkinson · Answer 1

The correct answer is B. a positive-sum game.

Explanation:

The positive sum is an expression derived from game theory that refers to a situation in which participants can cooperate and make a profit (+1), so the sum of the resulting winnings is a positive number ( + 1 + 1 = 2 or more).

A positive sum game is a scenario where agents have options capable of improving everyone at the same time. A positive sum game in everyday life is the exchange of favors, where each person can produce a great benefit to another with a small cost.