Adam Smith:
A) believed that trade in local communities is good for the economy, but trading with people located in foreign countries is bad for the economy.
B) did not discuss or have an opinion about international trade.
C) argued that it is beneficial to buy a product if the seller can sell it to us cheaper than we can make it for ourselves, regardless of the product's country of origin.
D) believed that trade in local communities is bad for the economy, but trading with people located in foreign countries is good for the economy.

Question

Quizplus · Accepted Answer

Adam Smith argued for the concept of comparative advantage, which states that it is beneficial for countries to specialize in producing goods in which they have a lower opportunity cost, and trade with other countries for goods in which they have a higher opportunity cost. This means that if a country can produce a product at a lower cost than another country, it should sell that product to the other country, even if it means importing other products in return. Therefore, Smith believed that it is beneficial to buy a product if the seller can sell it to us cheaper than we can make it for ourselves, regardless of the product's country of origin.