The theory of comparative advantage shows that the gains from international trade do not just result from the absolute advantage of producing at lower cost, but also from pursuing comparative advantage and producing at a lower opportunity cost. Thus, option (a) is correct.
Trade is a term used to describe economic activities. Trade is the term used to describe the purchasing and selling of goods and services. Trade can take many various forms, including both domestic and international trade.
According to the comparative advantage of in the international trade on the absolute advantage of the lower cost of the producing to the higher returns. The "opportunity cost" of choosing one course of action over another is the potential profit lost due to a missed opportunity. Add all the potential costs together to get the opportunity cost.
As a result, the principle of competitive advantages and producing at a reduced opportunity cost. Therefore, option (a) is correct.
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