If there is no comparative advantage in the production of either of the two goods produced by countries 1 and 2,then
A) the benefits resulting from trade between the two countries are increased.
B) there are no gains from specialization and trade between the two countries.
C) one country must be more productive in producing all goods than the other.
D) each country should specialize in the production of a particular good.
E) none of the above

Question

Quizplus · Accepted Answer

Comparative advantage is the ability of a country to produce a particular good or service at a lower opportunity cost than another country. If there is no comparative advantage, it means that both countries have the same opportunity cost in producing the two goods. In this case, there are no gains from specialization and trade between the two countries, as neither country has an advantage in producing either good. Therefore, the best option is B.

If There Is No Comparative Advantage in the Production of Either