The principle of comparative advantage does not provide answers to certain questions. One of those questions is
A)Do specialization and trade benefit more than one party to a trade?
B)Is it absolute advantage or comparative advantage that really matters?
C)How are the gains from trade shared among the parties to a trade?
D)Is it possible for specialization and trade to increase total output of traded goods?

Question

Quizplus · Accepted Answer

The principle of comparative advantage explains why trade is beneficial and how it increases overall efficiency and total output, but it does not specify how the gains from trade are distributed among the trading parties. This distribution depends on various factors, including the terms of trade and each party's bargaining power, which are not addressed by the principle of comparative advantage itself.

The Principle of Comparative Advantage Does Not Provide Answers to Certain