Question

According to the Smith, Ricardo, and Heckscher-Ohlin theories, a country’s economy may gain if its citizens buy some products from other nations that could be produced in their home nation. What is the reasoning behind this idea?
Multiple Choice

a. The natural resources of a country limit the types and quantities of items that can be produced.
b.International trade allows a country to specialize in items that can be produced most efficiently in that country.
c. First-mover advantages limit a country from producing every product that citizens need or want.
d. International trade is typically regulated by government forces that prevent a business from exporting.
e. Innovative products are typically produced in the home country, but high-demand products should be imported.

Answer 1

)Answer:

The correct answer is letter "B": International trade allows a country to specialize in items that can be produced most efficiently in that country.

Explanation:

Adam Smith (1723-1790), David Ricardo (1772-1823) and Eli Heckscher (1879-1952) and Bertil Ohlin (1899-1797) jointly provided their thoughts on international trade each one with their own position. In common, they believed international trade allowed companies to specialize in the production of goods they were the best at so countries could export those goods while importing goods whose production was developed by other countries specializing in them.  

In such a scenario, countries would approach an absolute advantage and maximum efficiency. Either theory assumed there were no trade barriers and that the factors of production cannot move between countries.