As predicted by the theory of comparative advantage,there should be a ______________ from regional trade agreements.
A) substantial net gain
B) minor net gain
C) no economic impact
D) substantial net loss
E) substantial trade diversion

Question

Quizplus · Accepted Answer

According to the theory of comparative advantage, when countries specialize in producing goods and services in which they have a comparative advantage and trade with each other, they will experience a net gain from regional trade agreements. This is because each country is able to produce the goods and services that they are relatively better at producing, which leads to increased efficiency, lower costs, and higher output levels. Therefore, the answer is A, substantial net gain.

As Predicted by the Theory of Comparative Advantage,there Should Be