The comparative advantage theory is useful in explaining _____________________ between countries that have very different factor endowments.
A)cost advantages
B)resource allocations
C)promotional expenses
D)intra-industry trade
E)inter-industry trade

Question

Quizplus · Accepted Answer

The comparative advantage theory, introduced by David Ricardo, explains inter-industry trade between countries that have different factor endowments. It suggests that countries will export goods in which they have a comparative advantage (lower opportunity cost) and import goods in which they have a comparative disadvantage, leading to more efficient global resource allocation and increased overall economic welfare.

The Comparative Advantage Theory Is Useful in Explaining _____________________ Between