If Two Nations Want to Trade with One Another, They

question 43

Multiple Choice

If two nations want to trade with one another, they can determine their respective comparative advantages by

• A)hiring economists to gather and interpret the relevant data.
• B)computing the opportunity costs of all goods and services.
• C)first determining which has absolute advantage in the production of goods and services.
• D)allowing firms in each country to freely engage in international trade.
• E)making certain that the prices of tradable goods and services are equal in both nations.

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