Two countries can achieve gains from trade even if one country has an absolute advantage in the production of both goods.

Question

Quizplus · Accepted Answer

Even if one country has an absolute advantage in producing both goods, both countries can still benefit from trade due to the principle of comparative advantage. This principle suggests that countries should specialize in producing goods for which they have a lower opportunity cost, leading to gains from trade for both parties.

Two Countries Can Achieve Gains from Trade Even If One