13. Assignment 3

Question 1

What is the theory of comparative advantage?

Answer 1

The theory that trade benefits both parties by allowing each to specialize in the goods that it can produce with relative efficiency.

Question 2

What is the difference between a race to the bottom and a pollution haven?

Answer 2

Race to the bottom is the process, pollution haven the result.

Question 3

Name a way to address water shortages from the supply side.

Answer 3

• Aquifers
• Dams
• Desalination

Question 4

Name 2 reasons why governments often subsidize water supply.

Answer 4

1. Often historical reasons
2. Irrigation provides both public and private goods
3. Hard to remove without political uproar
4. Basic need