Suppose that the country of Atlantis chose to isolate itself from the rest of the world. Its ruler proclaimed that Atlantis should become self-sufficient and so would not engage in foreign trade. From an economic perspective, when would this idea make sense?
A) if Atlantis had an absolute advantage in all goods
B) if Atlantis had no absolute advantages in any good.
C) never, as long as Atlantis had a comparative advantage in any good
D) never, as long as Atlantis had an absolute advantage in at least half the goods traded

Question

Quizplus · Accepted Answer

The concept of comparative advantage suggests that even if Atlantis did not have an absolute advantage in any good, it could still benefit from engaging in trade with other countries in order to focus on producing the goods it is relatively more efficient at producing. Therefore, the idea of complete self-sufficiency and no foreign trade would not make sense as long as Atlantis had a comparative advantage in any good.

Suppose That the Country of Atlantis Chose to Isolate Itself