If a country has an absolute advantage in two products and has a comparative advantage in only one product, what should it do?
A) Produce both products and export them to maximize its returns.
B) Specialize in the product it has a comparative advantage in and import the other.
C) Produce both products and export the cheapest and import the most expensive.
D) Produce both products and export the most expensive and import the cheapest.
E) It should not trade.

Question

Quizplus · Accepted Answer

Specializing in the product in which it has a comparative advantage allows the country to maximize efficiency and gains from trade, while importing the other product can be more cost-effective than producing it domestically.

If a Country Has an Absolute Advantage in Two Products