In basic international economics, which statement about trade between nations is most accurate?

Introduction / Context:
International trade theory explains how countries can gain from exchanging goods and services with each other. A central idea is comparative advantage, which shows that even if one country is more productive in all goods, trade can still benefit both sides. This question asks which statement most accurately summarises the potential impact of trade on nations.

Given Data / Assumptions:

• We are discussing trade between nations, not individual firms.
• The question seeks a general principle from standard economic theory.
• The focus is on potential gains from trade, not on short term distribution issues within countries.
• The concept of comparative advantage is assumed.

Concept / Approach:
According to the theory of comparative advantage, each nation should specialise in producing goods and services in which it has a relative efficiency advantage and trade them for goods where it is relatively less efficient. This specialisation and exchange can increase total world output and allow all trading partners to reach higher consumption levels than they could in isolation. Therefore, trade can make every nation better off in principle. It is not necessary that a nation be unable to produce a good domestically in order to benefit; it is sufficient that importing it is relatively cheaper in terms of opportunity cost. While trade may create winners and losers within a country, the general economic statement is that trade can make every nation better off.

Step-by-Step Solution:
Step 1: Recall the definition of comparative advantage as the ability to produce a good at a lower opportunity cost than another country.Step 2: Recognise that if each country specialises based on comparative advantage and trades, total production increases and potential gains are available to all.Step 3: Note that trade can benefit a country even if it is capable of producing all goods itself, as long as opportunity costs differ.Step 4: Review the answer options and select the one that reflects the idea that trade can make every nation better off by enabling specialisation and exchange.Step 5: Choose option D because it is the standard textbook statement about gains from trade, while the other options reflect common misconceptions.

Verification / Alternative check:
Simple numerical examples in economics textbooks show two countries, each with limited resources, that can produce two goods. When both countries specialise according to comparative advantage and trade, they can reach combinations of goods that lie outside their individual production possibility frontiers. This demonstrates that trade can make both countries better off, supporting the statement in option D.

Why Other Options Are Wrong:
Option A says that trade always makes some nations worse off, which contradicts the comparative advantage principle. Option B claims that trade helps only when a nation cannot produce a good at all, ignoring the role of opportunity cost and efficiency; a country may produce a good but still be better off importing it. Option C asserts that trade helps rich nations and hurts poor nations, a statement that is too simplistic and not supported by basic theory; many developing countries also gain from trade when they specialise in areas where they have comparative advantage.

Common Pitfalls:
People often confuse potential gains for a nation with the distribution of gains among different groups within the nation. Trade can indeed create adjustment problems and hurt some industries or workers even while making the country as a whole better off. For exam purposes, however, focus on the core theoretical statement: trade based on comparative advantage can make every nation better off.

Final Answer:
The most accurate statement is that trade can make every nation better off by allowing countries to specialise according to comparative advantage and exchange goods and services.