Under the theory of comparative advantage,liberalization of international trade will
A)enhance the welfare of the world's citizens.
B)create unemployment and displacement of workers permanently.
C)result in higher prices in the long run as monopolist are able to charge higher prices after eliminating their competitors.
D)all of the options

Question

Quizplus · Accepted Answer

According to the theory of comparative advantage, countries should specialize in producing goods that they can produce at a lower opportunity cost than other countries, and trade with each other. This can lead to increased efficiency and lower prices for consumers, which ultimately enhances the welfare of the world's citizens. While there may be some short-term displacement of workers, in the long run comparative advantage should lead to more efficient production and greater wealth for all trading partners. The elimination of competitors by monopolists is not a direct result of trade liberalization, but rather a separate issue related to market power.

Under the Theory of Comparative Advantage,liberalization of International Trade Will