According to the principle of comparative advantage, specialization and
Trade increase a nation's total output because:
A)resources are directed to their highest productivity.
B)the output of the nation's trading partner declines.
C)the nation can produce outside its production possibilities frontier.
D)the problem of unemployment is eliminated.

Question

Quizplus · Accepted Answer

The principle of comparative advantage states that specialization and trade lead to an increase in total output because resources are directed to their highest productivity. This means that each country can focus on producing the goods and services that they can produce most efficiently, based on their available resources and technology. By doing so, they can produce more overall and trade with other countries for the goods and services that they cannot produce as efficiently. This results in a net increase in output for both trading partners. The other options (B, C, and D) are not accurate descriptions of the principle of comparative advantage.

According to the Principle of Comparative Advantage, Specialization and