In a two-nation, two-good world, if one nation is more efficient in producing both goods than the other nation, then the more-efficient nation cannot gain from trading with the other nation.

Question

Quizplus · Accepted Answer

According to the principle of comparative advantage, even if one nation is more efficient in producing both goods, it can still gain from trade by specializing in the good for which it has a greater relative efficiency and trading for the other good.

In a Two-Nation, Two-Good World, If One Nation Is More