David Ricardo discovered that two countries can still gain by trading even if one country is more efficient in the production of every commodity.Ricardo's discovery is called the law of
A)comparative advantage.
B)absolute advantage.
C)compensating balances.
D)increasing returns.

Question

Quizplus · Accepted Answer

Ricardo's discovery is commonly known as the law of comparative advantage. It states that even if one country has an absolute advantage in the production of all goods, both countries can still gain from trade if they specialize in producing the goods they have a comparative advantage in and trade with each other. This allows for increased efficiency and higher overall production.

David Ricardo Discovered That Two Countries Can Still Gain by Trading