If labour in Mexico is less productive than labour in the United States in all areas of production, which of the following is correct?
A)Neither nation can benefit from trade.
B)Mexico can benefit from trade but the United States cannot.
C)Mexico will not have a comparative advantage in any good.
D)Both nations can benefit from trade.

Question

Quizplus · Accepted Answer

Even if labour in Mexico is less productive than labour in the United States, there may still be opportunities for both nations to benefit from trade. For example, Mexico may have a comparative advantage in producing certain goods that the United States does not, and can trade those goods to the United States in exchange for products that it cannot produce as efficiently. Specialization and trade can lead to greater efficiency and higher overall production for both nations. Therefore, option D is the correct choice.

If Labour in Mexico Is Less Productive Than Labour in the United