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Which of the following is true? a) If one country has an absolute disadvantage in one...

Which of the following is true?

a) If one country has an absolute disadvantage in one commodity, it must also have a comparative disadvantage in that commodity.

b) If one country has a comparative advantage in one commodity, it must also have an absolute advantage in that commodity.

c) If one country has absolute advantages in producing all commodities, it must specialize in and export all the commodities.

d) Each country can gain from specializing in and exporting the commodity with comparative advantage even if it has an absolute disadvantage in that commodity.
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Answer #1

Option d

d) Each country can gain from specializing in and exporting the commodity with comparative advantage even if it has an absolute disadvantage in that commodity

A country gain from trade if it trades the good in which has a comparative advantage because a comparative advantage depends on the opportunity cost of the production so the country can trade at least the opportunity cost of that good. It leads to more consmption than the PPF of the country so the economic welfare of all increases.

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