The comparative cost of doctrine of international trade means specialization in production according to
Answer Details
The comparative cost doctrine of international trade suggests that countries should specialize in the production of goods and services in which they have a comparative cost advantage, and then trade with other countries for goods and services in which they have a comparative cost disadvantage.
Comparative cost advantage means that a country can produce a good or service at a lower opportunity cost than another country. Opportunity cost is the cost of forgoing the production of one good or service in order to produce another. In other words, if a country can produce a good or service at a lower opportunity cost than another country, it has a comparative cost advantage in that good or service.
For example, if Country A can produce one unit of wheat using fewer resources than Country B, but Country B can produce one unit of cloth using fewer resources than Country A, then Country A has a comparative cost advantage in producing wheat, while Country B has a comparative cost advantage in producing cloth. By specializing in the production of these goods and then trading with each other, both countries can increase their overall output and benefit from the trade.
Therefore, the comparative cost doctrine of international trade suggests that countries should specialize in the production of goods and services in which they have a comparative cost advantage to achieve maximum efficiency and benefit from international trade.