Consider the Following Information About the Production of Two Goods

question 13

Multiple Choice

Consider the following information about the production of two goods, X and Y, in two countries, A and B:
∙ In Country A it takes Xa units of resources to produce one unit of X and Ya units of resources to produce one unit of Y.
∙ In Country B it takes Xb units of resources to produce one unit of X and Yb units of resources to produce one unit of Y.
∙ Assume the amount of resources used to produce the goods in the two countries can be compared unambiguously.
TABLE 32-1
-Refer to Table 32-1. There is no scope for gains from trade due to specialization between the two countries if

• A) Xa/Ya) is greater than Xb/Yb).
• B) Xa is equal to Yb.
• C) Xa/Ya) is equal to Xb/Yb).
• D) Xa is less than Yb and Ya is less than Yb.
• E) Xa is less than Xb.

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