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Why does specialization and trade benefit both Greta and Carlos in the example provided in the chapter?

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Final answer:

Greta and Carlos benefit from specialization and trade because it allows each country to focus on producing the goods they have a comparative advantage in. By specializing and trading, Greta and Carlos can increase their total output and benefit from the advantages of comparative advantage.

Step-by-step explanation:

Greta and Carlos benefit from specialization and trade because it allows each country to focus on producing the goods they have a comparative advantage in. Specialization in a particular job allows workers to utilize their skills and talents more effectively. For example, if Greta specializes in producing wheat, while Carlos specializes in producing corn, both countries can benefit from trading these goods. Greta can export her excess wheat to Carlos, who can in turn export his excess corn to Greta. By specializing and trading, Greta and Carlos can increase their total output and benefit from the advantages of comparative advantage.

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