When nations specialize according to comparative advantage and consumption rises in one country, consumption in another country must fall.

Question

Quizplus · Accepted Answer

Specialization and trade based on comparative advantage allows nations to increase their consumption by producing and exporting goods they are most efficient at producing. This leads to mutual gains from trade, where both countries can increase their consumption. Therefore, consumption in one country does not have to fall for consumption to rise in another country.

When Nations Specialize According to Comparative Advantage and Consumption Rises