In a two-good, two country world, if one country has an absolute advantage in the production of both goods, it cannot benefit by trading with the other country.

Question

Quizplus · Accepted Answer

Even if one country has an absolute advantage in the production of both goods, it can still benefit from trade by specializing in the production of the good in which it has a comparative advantage and importing the other good from the other country. This results in both countries being able to consume more of both goods than they could produce on their own.

In a Two-Good, Two Country World, If One Country Has