Assume that South Korea has a comparative advantage in televisions and India has a comparative advantage in clothes. What will happen if these two countries specialize and trade according to their comparative advantage?
A) All individuals in both countries will benefit.
B) South Korea will specialize in and export clothes.
C) India will produce more clothes than televisions in the absence of trade.
D) India will produce more televisions than clothes in the absence of trade.

Question

Quizplus · Accepted Answer

When countries specialize and trade according to their comparative advantage, they produce more of the goods for which they have a comparative advantage. India, having a comparative advantage in clothes, will produce more clothes than televisions in the absence of trade.

Assume That South Korea Has a Comparative Advantage in Televisions