According to Adam Smith:
A) trade is a way for rich people to exploit poor people.
B) trade within a nation benefits people but international trade does not.
C) trade does not benefit anyone, either at home or abroad.
D) people buy goods for which they have higher opportunity costs than others.

Question

Quizplus · Accepted Answer

According to Adam Smith's theory of comparative advantage, individuals should specialize in producing goods for which they have a lower opportunity cost than others, and trade with those who have a higher opportunity cost. This mutually beneficial exchange results in increased efficiency and overall economic growth. Therefore, people will buy goods for which they have higher opportunity costs than others, which is the basis for trade. Smith did not believe that trade was a way for rich people to exploit poor people or that international trade was harmful.