The principle of comparative advantage implies that trade

Question

Quizplus · Accepted Answer

The principle of comparative advantage suggests that countries can benefit from trade by producing and exporting goods that they can produce at a lower opportunity cost, while importing goods that others can produce at a lower opportunity cost. This means that both countries can increase their production and consumption by specializing in the production of goods they have a comparative advantage in, and trading with each other. Therefore, trade can increase the amount of world production.

The Principle of Comparative Advantage Implies That Trade