According to the principle of comparative advantage, a country is realizing gains from trade when it achieves a level of consumption that lies outside of its production possibilities curve.

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The principle of comparative advantage suggests that countries can gain from trade by specializing in the production of goods for which they have a comparative advantage and then trading these goods. This allows countries to consume at a point that is outside their production possibilities curve, which represents the maximum amount of goods or services that can be efficiently produced with available resources.

According to the Principle of Comparative Advantage, a Country Is