Question

Explain and discuss why even when an individual or country is more productive than another individual...

  • Explain and discuss why even when an individual or country is more productive than another individual or country at all tasks, trade between the two can improve overall output.

Homework Answers

Answer #1

Yes, it is possible when there exist comparative advantage between the nations.

If any country is nore productive in all the tasks but there exist some comparative advantage in any particular commodity then by specialising in production of that commodity, the country can make itself much better off.

Because, if such country produces the good in which it has comparative advantage then after specialising in that commodity, it would be able to trade among other countries and hence, export the good in which it has specialized.

And hence, will be able to reach at higher point and will be able to consume more than that it was consuming at autarky.

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