Question

Suppose that a country that has a high level of output per person agrees to trade with a country that has a low level of output per person. Which country can benefit?a. only the one with a low level of output per person. b. only the one with a high level of output per person. c. both d. Neither

Answer 1

c. both

Step-by-step explanation:

According to comparative advantage theory, both countries will benefit. The country with high output per person generates revenue by trading with a country with low output per person and the country with low output per person gains by having enough supply to meet its output deficit and thus reduce resource wastage in trying to produce. The summary is that the first country has comparative advantage over the second production outputs over the second country.