To benefit from trade, a person should:
A) specialize in an activity for which she has an absolute advantage.
B) specialize in an activity for which she has a comparative advantage.
C) do everything she possibly can.
D) do nothing at all.

Question

Quizplus · Accepted Answer

Specializing in an activity for which a person has a comparative advantage means that they can produce that good or service at a lower opportunity cost than other goods or services they could produce. This allows them to trade and benefit from the trade by obtaining goods or services at a lower opportunity cost than if they produced everything themselves. Specializing in an activity for which a person has an absolute advantage may not lead to trade because the other party may not benefit from the specialization if they also have an absolute advantage in that activity.

To Benefit from Trade, a Person Should