Both countries can benefit from trade when:

Question

Quizplus · Accepted Answer

When each country specializes in producing the good for which it has a comparative advantage, the total output of both countries will increase, leading to overall economic growth. This allows both countries to trade the goods in which they have a comparative advantage, resulting in mutually beneficial transactions. Absolute advantage may not always lead to mutually beneficial trade between two countries. Therefore, the answer is B.

Both Countries Can Benefit from Trade When