The relationship between trade and specialization is best characterized as follows:
A) Trade decreases specialization, which in turn increases the demand for trade.
B) Trade decreases specialization, which in turn decreases the demand for trade.
C) Trade increases specialization, which in turn increases the demand for trade.
D) Trade increases specialization, which in turn decreases the demand for trade.

Question

Quizplus · Accepted Answer

Trade allows for countries to specialize in the production of goods and services that they have a comparative advantage in, leading to increased efficiency and productivity. As a result, specialization increases the demand for trade as countries seek to exchange their specialized goods and services with others.

The Relationship Between Trade and Specialization Is Best Characterized as Follows