Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars.Also assume that Germany has an absolute advantage in both fish and cars.If these two countries specialize and trade so as to maximize the benefits of specialization and trade,then
A)the two countries' combined output of both goods will be higher than it would be in the absence of trade.
B)Greece will produce more fish than it would produce in the absence of trade.
C)Germany will produce more cars than it would produce in the absence of trade.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

When countries specialize based on comparative advantage and trade, they can increase their combined output. Greece will focus on producing fish, and Germany will focus on producing cars, leading to higher production of both goods than if they did not trade.

Assume That Greece Has a Comparative Advantage in Fish and Germany