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 above

Question

Quizplus · Accepted Answer

According to the theory of comparative advantage, liberalization of international trade allows countries to specialize in the production of goods and services in which they have a comparative advantage, resulting in increased efficiency and lower costs, which benefits consumers worldwide. Therefore, enhancing the welfare of the world's citizens is the most likely outcome. Options B and C are incorrect because the theory of comparative advantage does not support them.

Under the Theory of Comparative Advantage, Liberalization of International Trade