The law of comparative advantage states that

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The law of comparative advantage states that mutually beneficial trade can always take place between two countries whose pre-trade relative opportunity costs differ. This means that each country can specialize in producing the goods and services that they are relatively better at producing, and trade with each other to obtain the goods and services that they are relatively worse at producing. This allows both countries to benefit from trade, even if they have similar tastes and preferences, as long as they have different opportunity costs for producing different goods and services. Option A is incorrect because it describes the gold standard, which is not related to the law of comparative advantage. Option C is incorrect because having different tastes and preferences is not a necessary condition for trade to be mutually beneficial. Option D is incorrect because a country can still benefit from trade even if it does not have a comparative advantage in all goods and services.

The Law of Comparative Advantage States That