When nations trade based upon comparative advantage, only one side of the transaction will benefit.

Question

Quizplus · Accepted Answer

When nations trade based on comparative advantage, both sides can benefit from the exchange as they are each able to specialize in producing goods and services they are relatively better at producing, and obtaining goods and services they are relatively less efficient at producing from their trading partner. This leads to increased productivity and overall economic efficiencies for both nations involved.

When Nations Trade Based Upon Comparative Advantage, Only One Side