A country that has a comparative advantage in producing capital goods will ________ a country that has a comparative advantage in consumption goods.
A) reap all of the gains from trade when it trades with
B) grow slower than
C) reap fewer of the gains from trade when it trades with
D) specialize in producing capital goods and trade with

Question

Quizplus · Accepted Answer

Countries tend to specialize in the production of goods for which they have a comparative advantage and then trade these goods with other countries. Thus, a country with a comparative advantage in producing capital goods will specialize in that area and trade with countries that have a comparative advantage in consumption goods.

A Country That Has a Comparative Advantage in Producing Capital