Application of the Principle of Comparative Advantage leads to:
A) greater specialization of labor and other factors of production.
B) less specialization of labor and other factors of production.
C) societies without any specialization of labor.
D) lower total output.

Question

Quizplus · Accepted Answer

The principle of comparative advantage suggests that countries should specialize in producing the goods and services in which they have a lower opportunity cost compared to other countries. This leads to greater efficiency and increased output, as resources are allocated to the areas where they are most productive. Thus, greater specialization of labor and other factors of production is the outcome of applying the principle of comparative advantage.

Application of the Principle of Comparative Advantage Leads To