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.

---

Definitions:

Industrious

Characterized by hard work, diligence, and a strong dedication to achieving goals or completing tasks.

Inferior

Referring to something of lower quality or rank.

Erik Erikson

A developmental psychologist famous for his theory on the psychosocial development of human beings.

Resilience

The capacity to adapt well to significant adversity and to overcome serious stress.