The theory of absolute advantage was how Adam Smith explained basis for trade between nations.

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This statement is true. Adam Smith's theory of absolute advantage argued that countries should specialize in producing goods in which they have an absolute advantage, meaning they can produce a good more efficiently than another country, and then trade with other countries for goods they cannot produce as efficiently. This theory laid the foundation for the concept of international trade.

The Theory of Absolute Advantage Was How Adam Smith Explained