To obtain the greatest gains from trade, a country should specialize in and ____ those goods in which it has a comparative advantage and ____ those goods in which other countries have a comparative advantage.

Question

Quizplus · Accepted Answer

According to the principle of comparative advantage, a country should specialize in producing and exporting goods in which it has a lower opportunity cost than its trading partners, and import goods in which they have a comparative advantage. This allows both countries to benefit from trade by maximizing the efficiency of global production and increasing the availability of goods at lower prices. Therefore, a country should export the goods in which it has a comparative advantage and import the goods in which other countries have a comparative advantage. Choice C correctly represents this idea.

To Obtain the Greatest Gains from Trade, a Country Should