Free trade between countries:
A)should be based on absolute advantage.
B)will allow wealthy countries to exploit less developed nations.
C)will shift the domestic production possibility frontier to the right.
D)will allow for greater levels of consumption than without trade.

Question

Quizplus · Accepted Answer

Free trade allows for countries to specialize in producing goods and services that they have a comparative advantage in, leading to increased efficiency and lower costs. This can result in greater levels of consumption and overall welfare for both trading partners. While there may be concerns about exploitation or unfair competition, these can be addressed through regulations and policies to ensure that trade is conducted fairly and benefits all parties involved. The theory of comparative advantage suggests that all countries can benefit from free trade, regardless of their level of development or relative wealth.

Free Trade Between Countries