The classical trade theories of Smith and Ricardo predict that ?
Correct answer: D. All of the above
- A. Countries will completely specialize in the production of export goods
- B. Considerable trade will occur between countries with different levels of technology
- C. Small countries could obtain of the gains from trade when trading with large countries
- D. All of the above
Explanation
Smith and Ricardo show that technology differences can create trade, specialization can be substantial, and even a small country can gain by trading with a large one. Thus all three statements capture implications of classical trade theory.
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