Final answer:
Transportation costs can affect the comparative advantages of a country. Country A might change to having a comparative advantage in the other good if transportation costs for Widgets are too high. Gains from trade still occur when countries specialize based on comparative advantage.
Step-by-step explanation:
If transportation costs are particularly high for Widgets in a Ricardian 2x2 model where Country A has a comparative advantage, it is possible that Country A may switch to having a comparative advantage in the other good if the transportation costs outweigh the benefits of the existing comparative advantage.
This change is because comparative advantage is not static; it can evolve in response to cost changes, such as transportation expenses, productivity changes, knowledge base changes, and the education level of the workforce. However, one must examine the specific circumstances and the relative opportunity costs for producing both goods in question to determine the final outcome on comparative advantage.
It is also worth noting that even when a country has an absolute advantage in all goods, there can still be gains from specialization and trade based on comparative advantages. Specializing in the production of goods for which a country has the lowest opportunity cost leads to a more efficient allocation of resources, and maximizes the economic welfare.