Trade is based on:
A) absolute advantage
B) comparative advantage
C) trade subsidies
D) free trade agreements

Question

Quizplus · Accepted Answer

Trade is based on comparative advantage, which means that countries specialize in producing and exporting goods and services where they have a lower opportunity cost compared to other countries. This allows them to trade with other countries and benefit from the gains of trade. Absolute advantage, trade subsidies, and free trade agreements can influence trade but they are not the basis of trade.

Trade Is Based On