Economics · International Trade
If Country X can produce both wheat and cloth more efficiently than Country Y, the trade between them can still be mutually beneficial according to the theory of comparative advantage if:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1X and Y have identical opportunity costs in production
- 2X imposes tariffs on imports of Y's goods
- 3Y stops trading and focuses only on domestic production
- 4X specialises in the good where its efficiency advantage is greatest✓
Correct answer
X specialises in the good where its efficiency advantage is greatest
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