If country A produces all goods at a cheaper price than country B, country B will specialise in producing the goods for which it has comparative advantage.

Question

Quizplus · Accepted Answer

This is the principle of comparative advantage in international trade. Each country specializes in producing the goods it can produce most efficiently, while importing goods that other countries can produce more efficiently. This leads to a more efficient allocation of resources and increased global production.

If Country a Produces All Goods at a Cheaper Price