What economic principle is based on the idea of minimizing opportunity costs?

The correct choice centers on the concept of comparative advantage, which is foundational in international trade theory. Comparative advantage emphasizes the ability of an entity—whether a person, business, or country—to produce a specific good or service at a lower opportunity cost than others. This principle suggests that even if one party is more efficient at producing everything (having an absolute advantage), it can still benefit by specializing in the production of goods and services where it has the lowest opportunity costs and engaging in trade with others.

By focusing on comparative advantage, resources are allocated more efficiently, leading to a net gain in overall production and consumption for all parties involved in the trade. This principle underpins the rationale for international trade and economic specialization, as it illustrates how minimizing opportunity costs can enhance economic efficiency and productivity on a global scale.

In contrast, absolute advantage refers to the ability to produce more of a good with the same resources than another entity, which does not directly address the optimization of opportunity costs. A trade surplus involves the value of a country's exports exceeding its imports but is not rooted in the concept of opportunity costs. Lastly, factor endowment theory explains the advantages that countries have based on their factor resources (land, labor, and capital) and does not specifically focus on minimizing