What does the theory of comparative advantage suggest?

The theory of comparative advantage suggests that a country should specialize in producing products that it can produce most efficiently relative to other goods, while potentially importing other goods that it cannot produce as efficiently. This concept is based on the idea that nations can benefit from trade by focusing on their distinctive strengths and expertise. When countries specialize in what they do best, total global production increases, and resources are used more efficiently.

The rationale behind specialization according to comparative advantage is that even if one country is less efficient in producing all goods compared to another country, it can still benefit from trade by focusing on the good in which it has the lowest opportunity cost. This allows for a more productive allocation of resources, leading to greater overall economic efficiency and gains from trade. Countries can then exchange these specialized products, resulting in a wider variety of goods available to consumers and often at lower prices.

In contrast, the other options suggest approaches that do not align with the advantages of specialization and trade. For instance, focusing on products that a country can produce least efficiently would lead to wasted resources and lower economic output. Not engaging in international trade altogether would mean missing out on the benefits of specialization. Maintaining a balance of all types of production may limit efficiency and fail to capitalize on comparative advantages. Hence