When one nation specializes in the production of one good and another nation specializes in the production of another good, more of both goods can be produced.

Question

Quizplus · Accepted Answer

This is due to the principle of comparative advantage, which suggests that when countries specialize in producing goods for which they have a lower opportunity cost, they can trade to mutual benefit, leading to an overall increase in the production and consumption of goods.

When One Nation Specializes in the Production of One Good