Comparative advantage theory, developed by David Ricardo, explains that countries should specialize in producing and exporting goods in which they have a lower opportunity cost compared to other countries.

Country A has a comparative advantage in producing Good X because it can produce more units of Good X with the same resources compared to Country B.

Specialization and trade based on comparative advantage lead to increased production efficiency, lower consumer prices, and a greater variety of goods available to consumers.

Even in cases of absolute advantage, specialization and trade can lead to gains from trade due to the concept of opportunity cost. Countries can specialize in producing goods in which they have a lower opportunity cost, leading to increased overall production and consumption.

The opportunity cost of producing a good is the value of the next best alternative that is given up in order to produce that good.

Free trade between countries with comparative advantages leads to specialization in production and consumption. Country A will focus on producing and exporting Good X, while Country B will focus on producing and exporting Good Y. This results in increased production and consumption of both goods overall.

While free trade can lead to increased efficiency, lower prices, and a greater variety of goods, it can also lead to job losses in industries that are less competitive internationally.

The main arguments against free trade include job losses in certain industries, potential harm to domestic industries that are less competitive internationally, and the risk of environmental degradation due to increased production and consumption.

Free trade agreements are designed to promote free trade between countries, not to protect domestic industries from foreign competition.

The main goal of a tariff is to protect domestic industries from foreign competition by making imported goods more expensive.

The main goal of a quota is to protect domestic industries from foreign competition by limiting the quantity of imported goods.

The main goal of a subsidy is to protect domestic industries from foreign competition by providing financial assistance to domestic producers.

The main goal of a free trade agreement is to promote free trade between countries by reducing or eliminating tariffs and other trade barriers.

Free trade agreements are designed to promote free trade, not to increase government revenue.

Free trade agreements are designed to promote free trade, which typically leads to lower consumer prices, not higher prices.