Trade between two nations is mutually beneficial if each specializes in the good in which it has a comparative advantage.

Question

Quizplus · Accepted Answer

According to the theory of comparative advantage, if two nations specialize in producing the goods in which they have a lower opportunity cost, and trade with one another, they can both benefit through increased efficiency and greater access to a wider variety of goods. Therefore, trade between two nations can be mutually beneficial if they specialize in the goods in which they have a comparative advantage.

Trade Between Two Nations Is Mutually Beneficial If Each Specializes