Even if one country was most efficient in the production of two products,it must be relatively more efficient in the production of one good. It should then specialize in the production and export of that good in exchange for the importation of the other goods. This describes the:
A)Theory of comparative advantage
B)Theory of absolute advantage
C)Theory of factor proportions
D)Leontief Paradox
E)Product cycle theory

Question

Quizplus · Accepted Answer

The theory of comparative advantage states that even if one country is more efficient in producing all goods, it should specialize in the production and export of the good in which it has a comparative advantage and import the others. Therefore, the given scenario described is an example of the theory of comparative advantage.

Even If One Country Was Most Efficient in the Production