The law of comparative advantage explains why
A) specialization and exchange will make it possible for trading partners to expand their combined output.
B) there will be an inverse relationship between the price of a product and the quantity of it that will be demanded.
C) larger firms will have lower per unit costs than smaller firms.
D) an increase in the price of a good will lead to an expansion in the quantity supplied by business firms.

Question

Quizplus · Accepted Answer

The law of comparative advantage states that if countries specialize in producing goods where they have a lower opportunity cost, they can trade to mutual benefit, thus expanding their combined output.

The Law of Comparative Advantage Explains Why