When states specialize in producing the goods that they produce best and trading for goods that other states are better at producing,they are operating according to __________.

Question

Quizplus · Accepted Answer

The concept of comparative advantage states that when countries specialize in producing goods and services that they can produce at a lower opportunity cost than other countries, they can produce more efficiently and effectively. By doing so, they can trade and benefit from the gains of trade. This principle is widely accepted in international economics and forms the basis for the majority of global trade policies.

When States Specialize in Producing the Goods That They Produce