Question

Two countries can each produce clothing and computers.

If the two countries decide to specialize and exchange then all consumers, workers, and firms will benefit and experience gains from trade.
True or False?

Answer 1

True

Step-by-step explanation:

International trade refers to buying and selling of goods by a country beyond it's domestic geographical boundaries.

When a country decides to produce those goods in which it specializes and decides to exchange in trade for other goods, it stands to gain from such trade.

A country should focus on production of those goods in which it holds a comparative advantage. For example, if Ghana specializes in cocoa production and Brazil specializes in wheat production, both can benefit if each decides to produce as per it's comparative advantage and trade the rest.