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

Question

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The principle of comparative advantage suggests that even if one country is less efficient in producing all goods compared to another country, there can still be a basis for mutually beneficial trade if they specialize according to their relative efficiencies. This is based on differences in relative production costs, not on absolute advantages or the absence of tariffs and transportation costs.

The Principle of Comparative Advantage Indicates That Mutually Beneficial International