If a country does not have an absolute advantage in the production of at least one commodity, then it cannot gain from free trade.

Question

Quizplus · Accepted Answer

Even if a country does not have an absolute advantage in the production of any commodity, it can still benefit from free trade by specializing in the production of goods and services in which it has a comparative advantage and trading with other countries. Comparative advantage is determined by the opportunity cost of production, rather than the absolute level of productivity. Therefore, countries can still gain from free trade by focusing on producing and exporting goods and services that they can produce at a relatively lower opportunity cost.

If a Country Does Not Have an Absolute Advantage in the Production