The first example used to explain comparative advantage used two countries (England and Portugal)and two goods (wine and cloth)to show that
A)each country would be better off from trade if it had an absolute advantage in producing one of the goods.
B)each country would have a comparative advantage in the production of the good for which it had an absolute advantage.
C)mutually beneficial trade was possible between two countries even if one had an absolute advantage in the production of both goods.
D)mutually beneficial trade was possible between two countries even if one had a comparative advantage in the production of both goods.

Question

Quizplus · Accepted Answer

The concept of comparative advantage, as illustrated by the example of England and Portugal, shows that mutually beneficial trade is possible even if one country has an absolute advantage in producing both goods. The key is that each country should specialize in the good for which it has a comparative advantage, meaning it can produce at a lower opportunity cost.

The First Example Used to Explain Comparative Advantage Used Two