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Sagot :
Both countries will have the same advantage in producing goods if they produce the consumption goods and capital goods and currently have identical production curves.
What does the theory of comparative advantage state?
According to the theory of comparative advantage, a person should participate in an economic activity in which they have a comparative advantage, i.e., in which they are more effective than in the other activity. In terms of economies, they should engage in the production of those commodities and services at which they are better placed than the other.
Which country will have the comparative advantage in producing capital goods?
The output potential, resource level, and technological level of two nations A and B are identical. This suggests that both countries A and B are producing at the same level and that neither one is doing better than the other in terms of production.
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