Under the theory of comparative advantage,liberalization of international trade will
A)enhance the welfare of the world's citizens.
B)create unemployment and displacement of workers permanently.
C)result in higher prices in the long run as monopolists are able to charge higher prices after eliminating their competitors.
D)all of the above

Question

Quizplus · Accepted Answer

According to the theory of comparative advantage, each country should specialize in producing the goods and services in which it has a lower opportunity cost and trade with other countries. This leads to efficiency, lower prices, and ultimately, an increase in welfare for all countries involved in the trade. While there may be short-term challenges for certain industries or workers, the overall benefits of trade liberalization outweigh the costs. Choice B and C are incorrect as they do not align with the theory of comparative advantage.

Under the Theory of Comparative Advantage,liberalization of International Trade Will