Classical trade theory emphasized which of the following as an underlying explanation of the basis for trade?
A) Productivities of labor inputs
B) Tastes and preferences among nations
C) Changes in technologies over time
D) Quantities of economic resources

Question

Quizplus · Accepted Answer

Classical trade theory emphasized the productivities of labor inputs as the underlying explanation for the basis for trade. This theory, also known as the "comparative advantage" theory, argues that countries should specialize in producing goods and services in which they have a lower opportunity cost, meaning they give up less in order to produce those goods and services, and then trade these goods and services for products that have a higher opportunity cost in other countries.

Classical Trade Theory Emphasized Which of the Following as an Underlying