Assume that Spain has a comparative advantage in fish and Germany has a comparative advantage in cars.What will happen if these two countries specialize and trade according to their comparative advantage
A)All individuals in both countries will benefit.
B)Spain will specialize in and export cars.
C)Germany will produce more cars than fish in the absence of trade.
D)Germany will produce more fish than cars in the absence of trade.

Question

Quizplus · Accepted Answer

When countries specialize and trade according to their comparative advantage, they produce more of the good for which they have a comparative advantage. Germany, having a comparative advantage in cars, will produce more cars than fish in the absence of trade.

Assume That Spain Has a Comparative Advantage in Fish and Germany