Differences in comparative advantage are the key to mutually beneficial gains from trade.

Question

Quizplus · Accepted Answer

This statement is true. Comparative advantage refers to a country's ability to produce a particular good or service at a lower opportunity cost than another country. By specializing in the production of goods and services in which they have a comparative advantage, countries can increase efficiency and overall production, leading to gains from trade. Ultimately, trade allows countries to benefit from the differences in their comparative advantages.

Differences in Comparative Advantage Are the Key to Mutually Beneficial