Modern international trade is based on the principle of?

A. absolute cost advantage
B. comparative advantage
C. terms of trade
D. balance of trade

Correct Answer: Option B

B. comparative advantage

Explanation

Comparative advantage is an economic term that refers to an economy’s ability to produce goods and services at a lower opportunity cost than that of trade partners. A comparative advantage gives a company the ability to sell goods and services at a lower price than its competitors and realize stronger sales margins.