When one country can produce a good more efficiently than another country:

Question

Quizplus · Accepted Answer

Comparative advantage suggests that both countries can benefit from specializing in the good in which they have a relative advantage and trading with each other. This allows them to take advantage of their differing opportunity costs, resulting in a more efficient allocation of resources and mutual gains from trade. Therefore, both countries can specialize in the industry in which they have a comparative advantage and experience mutual gains. Options A and B are incorrect as they suggest that only one country will benefit from trade, overlooking the potential gains from trade for both countries involved. Option D is incorrect as it contradicts the concept of comparative advantage, which is widely accepted by economists.

When One Country Can Produce a Good More Efficiently Than