If a country specializes in goods that it can produce most readily and cheaply and trades those goods for the goods that another country can produce most readily and cheaply, then both countries are exercising the principle of:
A)absolute advantage
B)economics of scale
C)distinctive advantage
D)parallel competencies
E)comparative advantage

Question

Quizplus · Accepted Answer

This scenario describes the principle of comparative advantage, which suggests that countries benefit from specializing in the production of goods for which they have a lower opportunity cost and trading for goods that other countries produce at a lower opportunity cost.

If a Country Specializes in Goods That It Can Produce