The Gains from Trade That Are Possible When Two Countries

question 64

Multiple Choice

The gains from trade that are possible when two countries have different opportunity costs for wheat and coffee are realised when

• A) trade occurs and resources are reallocated within the two countries.
• B) the two countries continue to produce the same quantities of wheat and coffee.
• C) the demand curves in both countries shift inward.
• D) each country has an absolute advantage in one of the two commodities.

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