The theory of comparative advantage indicates that international trade should increase the total output of an economy by moving resources from comparative disadvantage to comparative advantage industries.

Question

Quizplus · Accepted Answer

The theory of comparative advantage suggests that even if a country does not have an absolute advantage in the production of any good, it can benefit from specializing in and exporting goods for which it has a comparative advantage (lower opportunity cost), thereby increasing overall economic output.

The Theory of Comparative Advantage Indicates That International Trade Should