The potential world production is greater with unrestricted free trade than it is with restricted free trade is the basic message of the theory of comparative advantage.

Question

Quizplus · Accepted Answer

The theory of comparative advantage states that countries should specialize in producing goods that they can produce most efficiently and trade with other countries for goods that they cannot produce as efficiently. This results in a greater potential world production than if countries were to try to produce all goods domestically without trade restrictions. Therefore, the statement is true.

The Potential World Production Is Greater with Unrestricted Free Trade