According to the theory of comparative advantage, specialization and free trade will benefit
A) only that trading party that has both an absolute advantage and a comparative advantage in the production of all goods.
B) all trading parties, even when some are absolutely more efficient producers than others.
C) only that trading party that has an absolute advantage in the production of all goods.
D) only that trading party that has a comparative advantage in the production of all goods.

Question

Quizplus · Accepted Answer

The theory of comparative advantage suggests that even if one country is less efficient in producing all goods compared to another country, there can still be benefits from trade. This is because countries should specialize in producing goods for which they have a lower opportunity cost, leading to gains from trade for all parties involved.

According to the Theory of Comparative Advantage, Specialization and Free