A basic tenet of Ricardo's theory is that:

Question

Quizplus · Accepted Answer

Ricardo's theory of comparative advantage suggests that all nations can benefit from international trade, as long as each specializes in producing the goods it is relatively more efficient at producing. By focusing on comparative advantage, nations can increase their overall level of consumption and gain from trade. Therefore, option B is the correct choice. Option A is false, as there is always room for gains from trade even if a country has an absolute advantage in producing all goods. Option C is partially true, as restrictions on trade may lead to domestic industries developing without competition, but it doesn't necessarily help consumers. Option D is false, as according to comparative advantage trade, both countries can benefit.

A Basic Tenet of Ricardo's Theory Is That