Which statement describes the benefit of specialisation in international trade?

• A. Tariff protection
• B. Overreliance on domestic markets
• C. Increase in import barriers
• D. Countries can specialise in producing goods where they have comparative advantage

Answer: (D)

Specialisation in international trade pays off when countries focus on producing goods where they have a comparative advantage—the lowest opportunity cost for producing that good relative to other goods. By doing this, resources are used more efficiently, so total output across the world rises. Each country can trade its specialized goods for others, gaining more of what it would cost more to produce domestically. This creates gains from trade and higher overall welfare for all involved.

The other options describe barriers or risks rather than benefits. Tariff protection and other import barriers typically reduce welfare by raising costs and limiting the gains from trade. Overreliance on domestic markets isn’t advantageous because it can increase vulnerability to shocks.