If Argentina has an absolute advantage in the production of beef and Guatemala has an absolute advantage in the production of bananas, then
A) it is reasonable to expect that specialization and trade will benefit both countries.
B) it is reasonable to expect that specialization will benefit both countries, but trade will not.
C) neither country has anything to gain from specialization and trade.
D) it is reasonable to expect that trade will benefit both countries, but specialization will not.

Question

Quizplus · Accepted Answer

Specialization and trade allow each country to focus on producing goods for which they have an absolute advantage, leading to increased efficiency and mutual benefits from trade.

If Argentina Has an Absolute Advantage in the Production of Beef