If labor in Mexico is less productive than labor in the United States in all areas of production,
A)neither nation can benefit from trade.
B)Mexico can benefit from trade but the United States cannot.
C)the United States will have a comparative advantage relative to Mexico in the production of all goods.
D)both Mexico and the United States still can benefit from trade.

Question

Quizplus · Accepted Answer

Even if labor in Mexico is less productive than labor in the United States in all areas of production, they can still benefit from trade. Mexico can specialize in and produce goods in which they have a comparative advantage or lower opportunity cost, while the United States can specialize in and produce goods in which they have a comparative advantage. This enables both countries to trade and consume more than they could produce by themselves.

If Labor in Mexico Is Less Productive Than Labor in the United