Concept:Modern international trade is explained by the principle of comparative advantage, which focuses on lower opportunity costs.
Explanation:Comparative advantage refers to a country's ability to produce a good at a lower opportunity cost than its trading partners.
This principle means that even if one country can produce everything more cheaply, both countries still benefit from trade by specialising in goods where they have the least opportunity cost.
It is the foundation of modern trade theory, first developed by David Ricardo.
Absolute cost advantage covers only direct cost differences, while terms of trade and balance of trade are outcomes of trade, not its underlying basis.
Answer:The correct option is
B. comparative advantage.