If one of two countries has an absolute advantage in the production of every commodity, then:
A)there is no comparative advantage and therefore no trade.
B)trade would be profitable for the inefficient country, but not for the efficient one.
C)trade would be profitable for the efficient country, but not the inefficient one.
D)total world production cannot be increased by specialization and trade.
E)none of the above are true.

Question

Quizplus · Accepted Answer

The concept of comparative advantage explains why trade can be beneficial for both countries, even if one country has an absolute advantage in all goods. It suggests that countries should specialize in producing goods for which they have the lowest opportunity cost, leading to increased overall efficiency and potential gains from trade for both parties.

If One of Two Countries Has an Absolute Advantage in the Production