Which economic principle supports the argument for free trade?

The correct answer is comparative advantage, which is a fundamental economic principle that supports the argument for free trade. This principle suggests that countries should specialize in the production of goods and services for which they have the lowest opportunity cost, meaning they can produce those goods more efficiently than other countries. When nations focus on their comparative advantages, they can trade with others, leading to a more efficient allocation of global resources. This results in increased overall production and consumption, benefiting all participating countries by allowing them to enjoy a greater variety of goods and services at lower prices.

By engaging in free trade based on comparative advantage, countries can enhance their economic growth, foster innovation, and create better employment opportunities. This principle underpins the rationale that even if one nation is less efficient in producing all products compared to another, trade can still be mutually beneficial if each country focuses on what it does best.

The other options do not align with the concept of free trade. Protectionism advocates for restrictions on international trade to protect domestic industries, monopoly power refers to a market structure where one producer dominates, and market saturation describes a situation where a product has been maximally distributed and consumed in a market, limiting growth potential.