Trade between two nations is mutually beneficial if each specializes in the good in which it has a comparative advantage?

Question

Social Studies

Lance Rich

8 March, 08:53

Trade between two nations is mutually beneficial if each specializes in the good in which it has a comparative advantage?

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Answers (1)

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Rayna Castaneda · Answer 1

The trade between two nations is mutually beneficial if each specializes in the good in which it has a comparative advantage is a TRUE statement.

Explanation:

If a raw material that is needed for the production of a specific commodity is available in abundance within the domestic boundaries of a country, the production of that particular commodity becomes way more economical for the country more than any other country. Trading in such a commodity with another countries, gives the producing country a competitive advantage as it fetches more profit through the trade of such commodities.