The theory of comparative advantage is primarily a theory which shows the benefits of trade as allowing:
A) The potential to exploit economies of scale
B) The sharing of technology across borders
C) The potential to exploit specialization and the division of labour
D) The power of competition to improve domestic industry efficiency

Question

Quizplus · Accepted Answer

The theory of comparative advantage, developed by David Ricardo, demonstrates how countries can benefit from trade even when one country can produce everything more efficiently than another. It highlights the benefits of specialization and the division of labour, where each country produces and exports goods in which it has a comparative advantage and imports goods in which it has a comparative disadvantage. This leads to more efficient global production and increased overall economic welfare.

The Theory of Comparative Advantage Is Primarily a Theory Which