What is the expected result if two nations use the theory of comparative advantage when deciding which goods to produce and trade?

Prepare for the ILTS Elementary Education Grades 1–6 (305) Exam. Study with interactive quizzes, flashcards, and detailed explanations. Gear up for success!

When two nations utilize the theory of comparative advantage, the expected outcome is that each nation will specialize in producing goods for which they have the lowest opportunity cost. This means that each country will focus its resources on the production of specific goods where they are most efficient relative to other goods. By specializing, nations can produce more of those goods than they would if they tried to produce everything equally.

This specialization leads to increased overall production when both countries trade the goods they produce, allowing each nation to benefit by obtaining products at a lower opportunity cost than if they attempted to produce everything themselves. Thus, by trading, both nations can enjoy a greater variety of goods and services than they would have in isolation, leading to mutual economic benefits.

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