When each country specializes in producing the good for which it has a comparative advantage:

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When each country specializes in producing the good for which it has a comparative advantage, both countries can benefit. This is because each country can produce their specialized product at a lower opportunity cost, meaning they can produce it more efficiently and at a lower cost than their trading partner. As a result, both countries can trade their specialized goods and consume a larger variety of goods at a lower cost than if they were to produce everything domestically. Choice B is incorrect because the gains from trade are not always equal - they depend on the relative size of the gains from specialization and trade. Choice C is incorrect because the size of the country does not determine the gains from trade.

When Each Country Specializes in Producing the Good for Which