When two countries specialize and trade with one another total production:
A) remains unchanged but consumption rises.
B) increases, but only if comparative advantage exists.
C) may increase, depending on trade relations.
D) and consumption remain unchanged.

Question

Quizplus · Accepted Answer

Specialization and trade allow countries to produce more efficiently by focusing on the goods and services they are comparatively better at producing. This results in an increase in total production, as each country can produce more of their specialized goods and trade for the goods they cannot produce as efficiently. Therefore, option B is correct.

When Two Countries Specialize and Trade with One Another Total