A country can still gain from trading certain goods even though its trading partners can produce those goods more cheaply. How is known this principle?
Correct answer: D. Comparative Advantage
- A. Relative Advantage
- B. Complete Advantage
- C. Comparative Edge
- D. Comparative Advantage
Explanation
Comparative advantage means specializing in goods with the lowest opportunity cost, even when another country can produce every good more cheaply in absolute terms. This is the basis for mutually beneficial trade.
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