Final answer:
The basic rationale for international trade is comparative advantage, which allows countries to specialize in the production of goods they can produce most efficiently and trade for others, benefitting from economies of scale and competition.
Step-by-step explanation:
The concept that provides the basic rationale for international trade is c. comparative advantage. Comparative advantage describes how countries gain from trade by specializing in what they can produce at a lower opportunity cost compared to other nations. This does not necessarily mean they are the most efficient producers, but that they have the smallest sacrifice for producing one good over another.
International trade enables economies, even small ones, to benefit from economies of scale. This leads to lower average production costs and allows a single producer to supply a large market while maintaining competition and variety. With competition comes innovation and responsiveness, making products better and more suited to consumer desires. For instance, the automobile industry benefits from this concept as it allows for more players in the market, increasing competition and innovation, which leads to higher-quality products for consumers.
The principle of comparative advantage allows countries to consume goods and services that lie outside of their domestic production possibilities, broadening the quantity and variety of goods available. Dynamic comparative advantage points to the evolution of these advantages over time due to innovation, learning, and other factors, thus maintaining the fluidity of trade advantages among nations.