What is the fundamental basis for trade among nations?
A)shortages or surpluses in nations that do not trade
B)misguided economic policies
C)absolute advantage
D)comparative advantage

Question

Quizplus · Accepted Answer

Comparative advantage is the concept that nations trade because they can produce certain goods or services at a lower opportunity cost than others, meaning they give up less to produce that certain good than another nation. This allows for both nations to benefit from trading with each other. It is not based on shortages, misguided policies, or absolute advantage, so options A, B, and C are incorrect.

What Is the Fundamental Basis for Trade Among Nations