The law of comparative advantage supports the ________ argument regarding international trade and globalization.

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Multiple Choice

The law of comparative advantage supports the ________ argument regarding international trade and globalization.

The main idea being tested is that trade based on comparative advantage creates mutual gains. When each country focuses on producing goods it can generate relatively more efficiently (lower opportunity costs) and trades for other goods, total world production rises. That expanded production means more to consume for people in all trading nations, so, in principle, everyone benefits from the exchange. This is the key justification people use to endorse globalization and open markets—the idea that increased specialization and voluntary trade lift welfare across participating countries. So the statement that every country wins best captures this mutual-benefits message. It’s not saying there are no adjustment costs or losers in specific industries, but it reflects the overall gain in welfare from trade. Other options point to narrower or different claims (like benefits only for some nations, or a policy outcome, or no net gains), which don’t align as directly with the comparative-advantage rationale that trade can make all trading partners better off.

The main idea being tested is that trade based on comparative advantage creates mutual gains. When each country focuses on producing goods it can generate relatively more efficiently (lower opportunity costs) and trades for other goods, total world production rises. That expanded production means more to consume for people in all trading nations, so, in principle, everyone benefits from the exchange. This is the key justification people use to endorse globalization and open markets—the idea that increased specialization and voluntary trade lift welfare across participating countries.

So the statement that every country wins best captures this mutual-benefits message. It’s not saying there are no adjustment costs or losers in specific industries, but it reflects the overall gain in welfare from trade. Other options point to narrower or different claims (like benefits only for some nations, or a policy outcome, or no net gains), which don’t align as directly with the comparative-advantage rationale that trade can make all trading partners better off.

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