International trade is based on the idea that:

Question

Quizplus · Accepted Answer

International trade is based on the idea that resources are less mobile internationally than goods. This means that countries specialize in producing certain goods and services based on their comparative advantage, and then trade these goods and services with other countries to obtain the products and services they cannot produce efficiently themselves. This concept is called the theory of comparative advantage, and it assumes that factors of production, such as labor and capital, are not equally available in all countries and are not easily transported across borders. Therefore, countries can benefit from trade by specializing in the production of goods and services that they can produce relatively efficiently with their available resources, and by importing goods and services that they cannot produce efficiently.

International Trade Is Based on the Idea That