Suppose rice can be produced in country X at a lower cost than in country Y, while tuna can be produced in country Y at a lower cost than in country X. International competition will:

Question

Quizplus · Accepted Answer

International competition will drive each country to specialise in the product they can produce at a lower cost, which in this case means X will specialise in rice and Y will specialise in tuna. This will lead to a more efficient use of resources and an increase in overall economic welfare.

Suppose Rice Can Be Produced in Country X at a Lower