The theory of refers to a theory of trade relationship that encourages nations to concentrate on exporting the goods they can produce most efficiently.

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The theory of absolute advantage, proposed by Adam Smith, suggests that a country should specialize in producing and exporting goods that it can produce most efficiently and at a lower cost compared to other countries. This encourages international trade and benefits all participating countries as they can obtain goods at a lower cost than if they were to produce them domestically.

The Theory of Refers to a Theory of Trade Relationship