Tom and Don Have Different Opportunity Costs of Producing Two

question 103

Multiple Choice

Tom and Don have different opportunity costs of producing two goods.If Tom and Don specialize in producing the goods in which each has a comparative advantage and they exchange goods,then

• A)they each lose because they are no longer able to produce and consume both goods.
• B)one of them will gain and one of them will lose.
• C)each will gain because each can consume a combination of goods that is outside his production possibilities frontier.
• D)each will produce a combination of goods that is outside his production possibilities frontier.
• E)each will produce a combination of goods that is inside his production possibilities frontier.

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