International trade is based on the existence of
A) absolute advantage.
B) perfect advantage.
C) productivity advantage.
D) comparative advantage.

Question

Quizplus · Accepted Answer

International trade is based on the principle of comparative advantage, which means that countries specialize in producing goods and services they can produce at a lower opportunity cost than other countries. This leads to increased efficiency in production and trade between countries. Absolute advantage and productivity advantage do not consider opportunity cost, while perfect advantage is not a recognized concept in economics.

International Trade Is Based on the Existence of