The case for free trade is based on the theory of absolute advantage.

Question

Quizplus · Accepted Answer

The case for free trade is primarily based on the theory of comparative advantage, not absolute advantage. Comparative advantage suggests that even if one country is less efficient at producing all goods compared to another country, there can still be benefits from trade if each country specializes in the goods for which it has a relative efficiency advantage.

The Case for Free Trade Is Based on the Theory