If Individuals a and B Can Both Produce Only Goods

question 95

Multiple Choice

If individuals A and B can both produce only goods X and Y,and A does not have a comparative advantage in the production of either X or Y,then we know

• A)B has an absolute advantage in the production of X and Y.
• B)A and B have the same opportunity costs of production for X and for Y.
• C)B has a comparative advantage in the production of both X and Y.
• D)the gains from trade will be large but only in one direction.
• E)A must have lower opportunity costs of production for both goods.

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