In a two-product,two-country world,international trade can lead to increases in:
A) Consumer welfare only if output of both products is increased
B) Output of both products and consumer welfare in both countries
C) Total production of both products,but not consumer welfare in both countries
D) Consumer welfare in both countries,but not total production of both products

Question

Quizplus · Accepted Answer

International trade can lead to an increase in output of both products and consumer welfare in both countries because it allows countries to specialize in the production of goods in which they have a comparative advantage and trade with each other. This leads to increased efficiency, lower costs and increased output of both goods, which can benefit consumers in both countries.

In a Two-Product,two-Country World,international Trade Can Lead to Increases In