If the United States is more productive than Mexico in all lines of production,then the United States cannot benefit from trade with Mexico.

Question

Quizplus · Accepted Answer

Even when the United States is more productive than Mexico in all lines of production, they can still benefit from trade with Mexico. This is because the principle of comparative advantage states that a country should specialize in producing and exporting the goods in which it has a lower opportunity cost and import goods in which it has a higher opportunity cost. Therefore, even if the United States can produce all goods more efficiently than Mexico, it could benefit from trading with Mexico if there are some goods in which Mexico has a comparative advantage.

If the United States Is More Productive Than Mexico in All