Trade barriers restrict international exchange

Steps:

• Identify factors affecting specialization: Comparative advantage drives trade when countries focus on efficient production.
• Evaluate each option's impact: Specialization increases with lower costs and barriers, decreases with restrictions.
• Compare to trade theory: Barriers like tariffs raise costs, reducing incentives for international trade.
• Select the most discouraging: Direct impediments to trade flow outweigh indirect factors.

Why D is correct:

• Increasing trade barriers, such as tariffs or quotas, directly violate the principle of comparative advantage by raising import costs and limiting market access, per Ricardo's trade theory.

Why the others are wrong:

• A: Decreasing labour supply may raise domestic costs but encourages specialization in capital-intensive goods, potentially boosting trade.
• B: Decreasing transport costs lowers trade expenses, promoting specialization and more international exchange.
• C: Increasing oil prices raises production and transport costs but does not directly block trade flows like barriers do.

Final answer: D