Among the following 4,which one do you think is the most powerful trade theories?
A)Theory of Absolute Advantage
B)Theory of Comparative Advantage
C)Mercantilism
D)Neo-mercantilism

Question

Quizplus · Accepted Answer

The Theory of Comparative Advantage is the most powerful trade theory as it demonstrates that countries can benefit from trade by specializing in the production of goods in which they have a lower opportunity cost of production compared to other countries. This theory is not limited to the production of goods with absolute advantage, unlike the Theory of Absolute Advantage, and it does not promote the idea of exporting more than importing in order to achieve a trade surplus, as in Mercantilism and Neo-Mercantilism. The Theory of Comparative Advantage highlights the importance of mutually beneficial trade, enabling countries to maximize their overall output and economic welfare through specialization and exchange.

Among the Following 4,which One Do You Think Is the Most