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According to the principle of comparative advantage, what happens when individuals specialize in their respective areas of expertise and engage in trade?

A) Everyone becomes worse off
B) Some individuals benefit while others do not
C) Everyone becomes better off
D) There is no change in anyone's well-being

1 Answer

4 votes

Final answer:

According to the principle of comparative advantage, when individuals specialize in their respective areas of expertise and engage in trade, everyone becomes better off.

Step-by-step explanation:

According to the principle of comparative advantage, when individuals specialize in their respective areas of expertise and engage in trade, everyone becomes better off. This is because specialization allows individuals to focus on what they are most efficient at producing, resulting in higher productivity and output. By trading with others who have different areas of specialization, individuals can access a wider variety of goods and services, which improves their overall well-being. For example, if one person is skilled at farming and another person is skilled at carpentry, both individuals can benefit by specializing in their respective skills and then trading their products.

User Nickil Maveli
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