The central theme behind the theory of comparative advantage is that if one country has an advantage (lower cost) in the production of two products, they should focus on the production of both so that they gain the greatest advantage in trade when compared to other countries that may have a lesser advantage.

Question

Quizplus · Accepted Answer

The theory of comparative advantage suggests that a country should specialize in producing and exporting goods in which it has a relative efficiency (lower opportunity cost), even if it has an absolute advantage in producing more than one good. This specialization allows for increased overall efficiency and benefits from trade, as countries import goods that they are relatively less efficient at producing.

The Central Theme Behind the Theory of Comparative Advantage Is