Both Countries Can Benefit from Trade When

question 32

Multiple Choice

Both countries can benefit from trade when:

• A)at least one country produces the good for which it has an absolute advantage.
• B)each country specializes in producing the good for which it has a comparative advantage.
• C)each country specializes in producing the good for which it has an absolute advantage.
• D)there are no trade barriers put in place by either country.

---

Definitions:

Opportunity Cost

The cost of missing out on the next best alternative when making a decision or choice.

Inflation

The rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Benefit

An advantage or profit gained from something.

Foregone Benefit

The lost potential gain from other alternatives when one alternative is chosen.