The logic of ____________ indicates that new opportunities for exchange between people with diverse production capabilities increase productivity and expand consumption opportunities by allowing people to specialize in the types of production they do relatively well.

Question

Quizplus · Accepted Answer

The given logic is referring to the theory of comparative advantage, which suggests that countries or individuals should specialize in producing goods or services where they have a lower opportunity cost and trade with others who have a comparative advantage in producing other goods or services. This leads to increased productivity and consumption opportunities for all parties involved. It is different from absolute advantage, which refers to the ability of a country or individual to produce a good or service more efficiently than another country or individual, and may not always lead to beneficial trade. Proportionate advantage and relative advantage are not widely recognized economic theories.

The Logic of ____________ Indicates That New Opportunities for Exchange