A country that has a comparative advantage in producing capital goods will _ a country that has a comparative advantage in consumption goods.
A) specialize in producing capital goods and trade with
B) reap fewer of the gains from trade when it trades with
C) reap all of the gains from trade when it trades with
D) grow slower than

Question

Quizplus · Accepted Answer

A country that has a comparative advantage in producing capital goods will specialize in producing capital goods and trade with a country that has a comparative advantage in consumption goods. This allows both countries to focus on producing the goods they are relatively better at producing and to reap the benefits of trade. By specializing, they can achieve a higher level of efficiency and ultimately increase their total output.

A Country That Has a Comparative Advantage in Producing Capital