The principle of comparative advantage does not provide answers to certain questions.One of those questions is as follows:
A)Is it possible for specialization and trade to benefit more than one party to a trade?
B)Is it possible for specialization and trade to increase total output of traded goods?
C)Do opportunity costs play a role in people's decisions to specialize in certain activities?
D)What determines the price at which trade takes place?

Question

Quizplus · Accepted Answer

The principle of comparative advantage only explains how countries or individuals can benefit from specializing in producing the goods they have a lower opportunity cost in relative to their trading partner. It doesn't determine the price at which trade takes place. Market forces such as demand and supply play a role in determining the price of traded goods.

The Principle of Comparative Advantage Does Not Provide Answers to Certain