The law of comparative advantage postulates that even if a nation is less efficient or has an absolute disadvantage with respect to another in production of all commodities, there is still a basis for mutually beneficial trade.

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The law of comparative advantage suggests that a country will benefit from trade if it specializes in the production of goods for which it has a comparative advantage (i.e., the goods it can produce at a lower opportunity cost than others) and trades for goods it produces less efficiently, even if it can produce all goods at an absolute disadvantage compared to another country. This principle underlines the basis for mutual benefits from trade between countries with different efficiencies in producing various goods.

The Law of Comparative Advantage Postulates That Even If a Nation