Trade based on comparative advantage
A) reduces the need for Asian tigers.
B) turns NICs into WHIPs.
C) reduces transaction costs.
D) facilitates political control.
E) raises living standards.

Question

Quizplus · Accepted Answer

Trade based on comparative advantage allows countries to specialize in producing goods and services that they are most efficient at producing, and therefore can produce at a lower opportunity cost. This leads to increased efficiency and productivity, which in turn raises living standards by increasing the availability and affordability of goods and services.

Trade Based on Comparative Advantage