Which of the following is an assumption made by the comparative advantage theory?
A) maximization of production and consumption
B) government interference and control in trade activities
C) creation of trade deficits
D) creation of trade surpluses

Question

Quizplus · Accepted Answer

The comparative advantage theory assumes that countries will seek to maximize their production and consumption by specializing in the production of goods and services in which they have a comparative advantage and trading with other countries for goods and services in which they do not have a comparative advantage. It does not assume government interference and control in trade activities or the creation of trade deficits/surpluses.

Which of the Following Is an Assumption Made by the Comparative