Suppose rice can be produced in country X at a lower cost than in country Y, while tuna can be produced in country Y at a lower cost than in country X. International competition will:

Question

Quizplus · Accepted Answer

Since each country has a comparative advantage in one good, international competition will lead to specialization where each country produces the good they have a comparative advantage in, leading to lower costs and increased efficiency. Therefore, country X will specialize in rice production while country Y will specialize in tuna production. This will lead to both countries benefiting from the lower costs and increased efficiency in their respective industries, resulting in a more efficient allocation of resources.

Suppose Rice Can Be Produced in Country X at a Lower