Individuals gain from trade because:
A)of specialization in production.
B)they can sell at a lower price than they can buy at.
C)self-sufficiency is efficient.
D)of the principle of absolute advantage.

Question

Quizplus · Accepted Answer

When individuals specialize in producing goods or services in which they have a comparative advantage, they can produce those goods or services at a lower opportunity cost than others. By trading their specialized goods or services with others, they can obtain goods or services in which they do not have a comparative advantage at a lower opportunity cost than if they tried to produce those goods or services themselves. Therefore, they benefit from trade by being able to consume more goods or services than they could have produced on their own. Choices B and C are incorrect because selling at a lower price and being self-sufficient may not necessarily result in economic benefits. Choice D is also inferior to choice A, as the concept of absolute advantage only considers the productivity of labor and not the opportunity cost of production.

Individuals Gain from Trade Because