The concept of comparative advantage implies that:
A) there are winners and losers when people trade without specializing.
B) people have to be self-sufficient.
C) people can benefit from specializing and trading with each other.
D) only those people who are productive benefit from trade.

Question

Quizplus · Accepted Answer

The concept of comparative advantage suggests that people can gain from specializing in producing the goods and services they can produce at a lower opportunity cost than other producers and then trading with others who have a higher opportunity cost of producing those goods and services. Consequently, people will be able to get more goods and services by specializing and trading, leading to mutual gains from trade. Therefore, option C best fits the definition of comparative advantage. The other options are incorrect because they do not reflect the essence of comparative advantage.

The Concept of Comparative Advantage Implies That