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The Law of Comparative Advantage Recommends the Net Benefits of Trade

Question 3

Multiple Choice

The Law of Comparative Advantage recommends the net benefits of trade when


A) each trading partner can produce and sell the products where it has respective lower opportunity cost, and then trades for other products.
B) each trading partner can produce and sell the products where it has respective higher opportunity cost, and then trades for other products.
C) each trading partner produces and sells products where their respective opportunity costs are equal, and then trade for other products.
D) each trading partner takes advantage of government subsidies to expand their exports, while relying on import tariffs to prevent the entry of cheaper foreign-made products.
E) None of the above.

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