Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars. If these two countries specialize and trade according to their comparative advantage, which of the following would NOT be true?
A)Greece will specialize in and export fish.
B)Some individuals in each country will be hurt.
C)More of each good can be consumed in both countries.
D)Greece will benefit from trade more than Germany.

Question

Quizplus · Accepted Answer

It is not necessarily true that Greece will benefit from trade more than Germany. Both countries can benefit from trade, but the extent to which each country benefits depends on the terms of trade (i.e. the relative prices of goods). If Germany's cars are in higher demand than Greece's fish, then Germany may benefit more from trade.

Assume That Greece Has a Comparative Advantage in Fish and Germany