The theory of comparative advantage states that even if a country does not have absolute advantage in production, the country can still profitably specialize if the country is relatively more efficient.

Question

Quizplus · Accepted Answer

The theory of comparative advantage argues that countries should specialize in producing goods and services in which they have a lower opportunity cost than their trading partners, rather than trying to produce everything themselves. This is based on the idea that even if a country does not have an absolute advantage in producing a particular good or service, as long as it can produce that good or service more efficiently than other countries, it can still benefit from specializing and engaging in international trade. The theory of comparative advantage suggests that countries can benefit from specializing in the goods and services they can produce more efficiently than other countries, even if they don't have an absolute advantage in producing every good.

The Theory of Comparative Advantage States That Even If a Country