The comparative advantage argument in free trade
A)ignores the cost of readjustment.
B)is a short-run argument.
C)only works for two goods at a time.
D)none of the above

Question

Quizplus · Accepted Answer

The comparative advantage argument in free trade assumes that resources will quickly and smoothly shift from the production of one good to another. However, in reality, there may be significant costs associated with this readjustment process, including unemployment and retraining expenses. Therefore, the comparative advantage argument ignores the cost of readjustment.

The Comparative Advantage Argument in Free Trade