Suppose labour in Mexico is less productive than labour in Canada.What can we conclude from this information
A)that neither nation can benefit from trade
B)that Mexico can benefit from trade, but Canada cannot
C)that Mexico will not have a comparative advantage in any good
D)that both nations can benefit from trade

Question

Quizplus · Accepted Answer

Even if one country has a lower productivity rate than another, trade can still be beneficial for both parties. This is because each country has a comparative advantage in producing certain goods or services, and can therefore trade for products where they have a disadvantage. In this case, Mexico may have a lower productivity rate than Canada, but it may have a comparative advantage in producing certain goods, such as agricultural products or certain manufactured goods, which it can trade with Canada for goods that it cannot produce as efficiently. Therefore, both countries can benefit from trade.

Suppose Labour in Mexico Is Less Productive Than Labour in Canada.What