When two countries specialize in the production of different goods and trade with each other, it is most likely each country will
A) export the goods in which it has a comparative advantage.
B) export the goods in which it has an absolute advantage.
C) import the goods in which it has a comparative advantage.
D) import the goods in which it has an absolute advantage.

Question

Quizplus · Accepted Answer

When two countries specialize in the production of different goods, they will likely have a comparative advantage in producing certain goods. Each country will then export the goods in which it has a comparative advantage and import the goods in which it has a comparative disadvantage. This leads to increased efficiency and benefits both countries through increased trade.

When Two Countries Specialize in the Production of Different Goods