The figure given below represents the PPC in two nations

Question

The figure given below represents the PPC in two nations - Germany and Korea, producing only two goods, cars and food.Figure 2.4
 
-Gains from trade can be realized if each country specializes in the production of a good in which it has a comparative advantage.

Quizplus · Accepted Answer

By specializing in the production of a good in which it has a comparative advantage, each country can produce that good more efficiently and at a lower opportunity cost than the other country. This can lead to gains from trade, as each country can trade the good in which it has a comparative disadvantage for the good in which it has a comparative advantage. As a result, both countries can consume more of both goods than they would be able to produce on their own.