Economics · International Trade
The Theory of Absolute Advantage states that:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1National wealth and power are best served by increasing exports and decreasing imports.
- 2Nations can increase their economic well-being by specialising in the production of goods they produce more efficiently than other countries.✓
- 3The value or price of a commodity depends exclusively on the amount of labour going into its production, and therefore factor prices will be the same.
- 4Differences in absolute advantage explain the differences in factor endowment in different countries.
Correct answer
Nations can increase their economic well-being by specialising in the production of goods they produce more efficiently than other countries.
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