Trade decisions are based on the principle of absolute advantage.

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Gustavo Acosta · Accepted Answer

Final Answer : False, Explanation :  Trade decisions are often based on the principle of comparative advantage, not absolute advantage. Comparative advantage refers to the ability of a country to produce goods or services at a lower opportunity cost than others, which is a more relevant factor for trade than absolute advantage, which refers to the ability of a country to produce more of a good or service than others with the same amount of resources.

Trade decisions are based on the principle of absolute advantage.

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