When nations specialize according to their comparative advantage

Question

Quizplus · Accepted Answer

When nations specialize according to their comparative advantage, they produce the goods and services they excel at producing efficiently and then trade with other countries for goods and services they can't produce as efficiently. This leads to an increase in total world production as each country specializes in what they are comparatively better at producing. Additionally, total world consumption also increases as countries can now access a wider range of goods and services at lower prices through trade. Therefore, the correct answer is B.

When Nations Specialize According to Their Comparative Advantage