What happens when countries specialize according to their comparative advantage?
A) It is possible to increase world output of all goods.
B) It is possible to increase world output of some goods only by reducing the output of others.
C) One country is likely to gain from trade while others lose.
D) All countries will lose from trade.

Question

Quizplus · Accepted Answer

When countries specialize according to their comparative advantage, they produce the goods that they are most efficient at producing, and trade with other countries for the goods that they are less efficient at producing. This leads to an increase in overall world output of all goods, as countries are producing at maximum efficiency and utilizing their resources effectively. Therefore, option A is the best choice.

What Happens When Countries Specialize According to Their Comparative Advantage