Which of the following statements about trade is true?

Question

Quizplus · Accepted Answer

Trade allows individuals to specialize in producing goods or services in which they have a comparative advantage, which is the ability to produce a good or service at a lower opportunity cost than someone else. This leads to an increase in overall productivity and economic growth, benefiting everyone in society. Absolute advantage, on the other hand, refers to the ability to produce a good or service more efficiently than anyone else, which may not necessarily lead to gains from trade for everyone in society. Option A is incorrect because unrestricted trade can lead to winners and losers, and not everyone may benefit equally. Option C is incorrect because having skills in all activities still means that certain activities have a lower opportunity cost for that individual, making specialization and trade beneficial. Option D is also incorrect for the same reason as option A, and because it assumes that absolute advantage leads to gains from trade for everyone, which is not always the case.

Which of the Following Statements About Trade Is True