Which of the following theories identifies specialization as the main reason for international business activity?
A)product life cycle theory of international trade
B)theory of diversification
C)doctrine of comparative advantage
D)theory of globalization

Question

Quizplus · Accepted Answer

The doctrine of comparative advantage states that countries should specialize in producing goods or services which they can produce at lower opportunity cost than other countries. This leads to international trade as countries trade their specialized goods or services with others, resulting in mutual benefits. Therefore, specialization is identified as the main reason for international business activity in the doctrine of comparative advantage. The product life cycle theory, theory of diversification, and theory of globalization do not specifically focus on specialization as the main reason for international business activity.

Which of the Following Theories Identifies Specialization as the Main