The principle of comparative advantage does not provide answers to certain questions.One of those questions is as follows:
A)Do specialization and trade benefit more than one party to a trade?
B)Is it absolute advantage or comparative advantage that really matters?
C)How are the gains from trade shared among the parties to a trade?
D)Is it possible for specialization and trade to increase total output of traded goods?

Question

Quizplus · Accepted Answer

The principle of comparative advantage only explains the benefits of specialization and trade, it does not provide answers to how the gains from trade are shared among the parties to a trade. This is a separate issue that involves negotiations and agreements between trading partners. The other options (A, B, and D) are all questions that can be answered by the principle of comparative advantage.

The Principle of Comparative Advantage Does Not Provide Answers to Certain