Country A can produce product X, but it can also buy it at a cheap rate from Country B. Which of the following courses of action is suitable in this situation according to Adam Smith's theory of absolute advantage?
A) Country A should import product X from Country B and it should not attempt to produce it at home.
B) Country A should partly import the product and produce it domestically.
C) Country A should produce more of product X and should attempt to obtain an absolute advantage for the product.
D) Country A should subsidize the production of product X to obtain an absolute advantage over Country B.
Correct Answer:
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