BBB International Business Practice Exam 2025 – 400 Free Practice Questions to Pass the Exam

Comparative advantage encourages international cooperation and trade because it posits that countries benefit economically when they specialize in the production of goods and services for which they have a lower opportunity cost relative to other nations. This theory suggests that by focusing on their specific strengths, countries can produce more efficiently, leading to increased overall output and mutual gains from trade.

When countries trade, they can exchange surplus production of goods in which they hold a comparative advantage, allowing all participating countries to enjoy a greater variety of goods and potentially lower prices than if they tried to produce everything independently. This collaboration between nations to leverage their unique advantages fosters stronger economic ties, enhances global trade relationships, and contributes to overall economic growth worldwide.

Other options, such as avoiding specialization, producing everything in-house, or focusing solely on increasing domestic demand, contradict the essence of comparative advantage, which highlights efficiency, specialization, and interdependence among nations in global trade.