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) grow slower than
C) reap fewer of the gains from trade when it trades with
D) reap all of the gains from trade when it trades with

Question

Quizplus · Accepted Answer

A country that has a comparative advantage in producing capital goods can specialize in producing capital goods and trade with a country that has a comparative advantage in producing consumption goods. This will lead to both countries benefiting from trade, as each country will be able to obtain the goods they need at a lower opportunity cost than if they produced everything domestically.

A Country That Has a Comparative Advantage in Producing Capital