The benefits to specialization are enhanced when two trading partners have:
A) absolute advantages in producing the same goods.
B) similar consumption preferences.
C) very similar opportunity costs.
D) large comparative advantages in different goods.

Question

Quizplus · Accepted Answer

Specialization benefits are maximized when each trading partner has a large comparative advantage in producing different goods. This allows for increased efficiency and productivity, which ultimately leads to gains from trade for both parties. Options A, B, and C all suggest some level of similarity or sameness, which would not necessarily lead to the greatest benefits of specialization.

The Benefits to Specialization Are Enhanced When Two Trading Partners