According to the principle of comparative advantage, all countries can benefit from trading with one another because trade allows each country to specialize in doing what it does best.

Question

Quizplus · Accepted Answer

The principle of comparative advantage suggests that even if one country is less efficient at producing all goods compared to another country, there can still be mutual benefits from trade. This is because countries can specialize in producing the goods for which they have a comparative advantage (i.e., the goods they can produce at a lower opportunity cost than others) and then trade to obtain other goods. This specialization and trade can lead to increased overall efficiency and welfare for all countries involved.

According to the Principle of Comparative Advantage, All Countries Can