According to the Ricardian principle of comparative advantage,
International trade increases a nation's total output because:
A)the nation's resources are used where they are most productive.
B)the output of the nation's trading partner declines.
C)the nation can produce to the exterior of its production possibilities frontier.
D)the nation is able to increase its consumption.

Question

Quizplus · Accepted Answer

The Ricardian principle of comparative advantage states that a nation should specialize in producing and exporting goods that it can produce more efficiently than other countries, and import goods that it cannot produce as efficiently. Through this specialization, a nation's resources are used where they are most productive, leading to an increase in total output. Therefore, option A is the correct answer. Option B is incorrect as international trade does not necessarily lead to a decline in the output of a nation's trading partner. Option C is incorrect as producing beyond the production possibilities frontier is not possible due to resource constraints. Option D is also incorrect as the Ricardian principle does not necessarily lead to an increase in consumption, but rather an increase in total output.

According to the Ricardian Principle of Comparative Advantage