Answer to Question #282576 in Economics for Hafsa

Question

In the absence of trade, a nation's production possibility frontier is also its consumption frontier. with trade, each nation can specialize in producing the commodity of its comparative advantage and exchange part of its comparative disadvantage. By so doing, both nations end up consuming more of both commodities than without trade. With complete specialization, the equilibrium-relative commodity prices will be between the pretrade-relative commodity prices prevailing in each nation

Answer 1

Comparative advantage shows tariffs and trade quotas protect inefficient firms, harm consumers and lower total productivity. The fact that the country A gains much more than the country B is not important. What is important is that both nations can gain from specialization in production and trade.