The Gains from Trade That Are Possible When Two Countries

question 58

Multiple Choice

The gains from trade that are possible when two countries have different opportunity costs for wheat and coffee are realized 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) each country has an absolute advantage in one of the two commodities.
• D) the demand curves in both countries shift inward.

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Definitions:

Compounded Annually

Interest calculation method where the interest is added to the principal at the end of each year, and the total becomes the principal for the next year.

Company Expansion

The process of a company increasing its size, operations, or market presence, often through investment, acquisitions, or increasing its customer base.

Compounded Monthly

The process of calculating interest on both the initial principal and the accumulated interest of previous periods on a monthly basis.

Semi-Annually

A term referring to an event or action that occurs twice a year.