An important insight of international trade theory is that when two countries engage in voluntary trade
A) one country always benefits at the expense of the other.
B) it is almost always beneficial to both countries.
C) it only benefits the low wage country.
D) it only benefits the high wage country.
E) it is almost never beneficial to both countries.

Question

Quizplus · Accepted Answer

International trade theory, based on comparative advantage, suggests that when countries specialize in producing what they are relatively better at, and then trade with each other, both countries benefit by increasing their consumption possibilities beyond what they could produce domestically. Therefore, it is almost always beneficial to both countries.

An Important Insight of International Trade Theory Is That When