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Employing comparative advantage increases the total satisfaction with what's produced, but not the total amount of...

Employing comparative advantage increases the total satisfaction with what's produced, but not the total amount of what's produced. T or F?

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Answer #1

False.

As per law of comparative advantage, one party has comparative advantage in producing that good which it can produce at a lower opportunity cost, compared to another party. A party will specialize in producing that good in which it has comparative advantage. When specialization is done as per comparative advantage and the parties engage in trade, total production of the goods increase when both parties sell the good in which it has comparative advantage.

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