According to Adam Smith:
A) trade is a way for rich people to exploit poor people.
B) trade within a nation benefits people but international trade does not.
C) trade does not benefit anyone.
D) people buy goods for which they have higher opportunity costs than others.

Question

Quizplus · Accepted Answer

According to Adam Smith's theory of absolute advantage, people buy goods for which they have higher opportunity costs than others. This means that individuals and countries specialize in producing and exporting goods that they can produce most efficiently and importing goods that others can produce more efficiently. Through this trade, both parties benefit, leading to increased economic growth and prosperity. Smith did not believe that trade is a way for rich people to exploit poor people, nor did he believe that trade within a nation is necessarily better than international trade.