Statement I: The law of comparative advantage states that total output is greatest when each product is made by the country that has the lowest opportunity cost.
Statement II: Absolute advantage is not necessary for trade to take place,but comparative advantage is.

Question

Quizplus · Accepted Answer

Statement I accurately describes the law of comparative advantage, while statement II is also correct in stating that absolute advantage is not necessary for trade, but comparative advantage is necessary. So, both statements are true.

Statement I: the Law of Comparative Advantage States That Total