Each trading nation can gain by specializing in producing those things for which it is a low-opportunity cost producer. This statement best describes the implications of the
A) free rider problem.
B) law of comparative advantage.
C) infant-industry argument.
D) law of diminishing marginal returns.

Question

Quizplus · Accepted Answer

The law of comparative advantage states that each country should specialize in producing and exporting goods for which it has a lower opportunity cost of production. This allows countries to maximize their economic efficiency and gain from trade.

Each Trading Nation Can Gain by Specializing in Producing Those