Suppose that each country completely specializes in the production of the good in which it has a comparative advantage, producing only that good. In this case, the country that produces rye will produce million bushels per month, and the country that produces jeans will produce million pairs per month.
Suppose that each country completely specializes in the production of the good in which it has a
million bushels per month, and the country that produces jeans will produce
million pairs per month.
The economic theory proposes that, if nations apply the standard of comparative advantage, the joined output will be expanded in correlation with the output that would be delivered if the two nations attempted to get independent and distribute resources towards production of both goods. It is somewhat more muddled. A nation is said to have a comparative advantage on the off chance that it delivers a decent or administration with the least opportunity cost. The formula for the same is given below
Given that, each country is specialized in different goods, one is in the rye and another is in jeans. This is the best strategy for any country for the international trade that only produce those services and goods in which you have a comparative advantage because you can produce more of those services and good. So the given statement is true.
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