The principle of comparative advantage indicates that mutually beneﬁcial international trade can take place only when

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The principle of comparative advantage indicates that countries will benefit from international trade when they can produce certain goods at a lower opportunity cost than other countries. This means that relative costs of production must differ between nations for mutually beneficial trade to take place. Eliminating tariffs or having low transportation costs can facilitate trade, but they are not the main determinant of whether trade is possible or beneficial. The ability to produce more of a certain product than other nations is not necessarily an indication of comparative advantage.

The Principle of Comparative Advantage Indicates That Mutually Beneﬁcial International