The United States has a comparative advantage in the production of wheat, and Haiti has a comparative advantage in the production of sugar. If both countries specialize based on the theory of comparative advantage
A) only the production of wheat will increase.
B) the production and consumption of both goods will increase.
C) only the production of both goods will increase.
D) only the consumption of both goods will increase.

Question

Quizplus · Accepted Answer

According to the theory of comparative advantage, if each country specializes in the production of the good for which it has a comparative advantage, then trades with the other, both the production and consumption of both goods will increase. This is because each country is producing what it is relatively more efficient at, leading to greater overall output and allowing for trade that benefits both parties.

The United States Has a Comparative Advantage in the Production