When applied to international economics, the theory of comparative advantage proposes that total worldwide output will be greatest when:
A) Each nation's total imports approximately equal its total exports.
B) Each good is produced by the nation that has the lowest opportunity cost for that good.
C) Goods that contribute to a nation's balance-of-payments deficit are no longer imported.
D) International trade is unrestricted and tariffs are not imposed.

Question

Quizplus · Accepted Answer

The theory of comparative advantage suggests that total worldwide output is maximized when each country specializes in producing goods for which it has the lowest opportunity cost, allowing for more efficient global production and trade.

When Applied to International Economics, the Theory of Comparative Advantage