Answer :
Final answer:
Both Adam Smith and David Ricardo theorized that mutually beneficial trade is possible and beneficial. Smith’s 'invisible hand' theory suggests that individual interests in market operations indirectly benefit society, including in trade.
Explanation:
Yes, according to both Adam Smith and David Ricardo, mutually beneficial trade is not only possible but also essential for the growth of any economy. Adam Smith, known as the father of modern economics, posited an 'invisible hand' theory, suggesting that when individuals pursue their own interests in markets, they inadvertently benefit society. This theory applies to trade as well, where countries specialize in producing goods they can make most efficiently and trade them for those they can't, leading to mutual benefits.
David Ricardo, a classical economist, extended this idea with his theory of Comparative Advantage. It states that even if a country is less efficient in producing all goods compared to another, there will still be a range of goods where it has a relative efficiency, or comparative advantage. By focusing on producing and exporting these goods, and importing goods where it's inefficient, mutually beneficial trade is achieved.
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