Asked by taylor harrington on Jun 01, 2024
Verified
Two countries can achieve gains from trade even if one country has an absolute advantage in the production of both goods.
Gains From Trade
The net benefits that individuals, companies, or countries obtain by voluntarily exchanging goods or services with one another.
Absolute Advantage
The ability of an entity to produce a good or service more efficiently than its competitors, using fewer resources.
- Examine the gains from specialization and trade for individuals and countries.
Verified Answer
EE
edgar estradaJun 04, 2024
Final Answer :
True
Explanation :
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.
Learning Objectives
- Examine the gains from specialization and trade for individuals and countries.