If We Are to Demonstrate Gains from Trade in the Theory

question 8

Multiple Choice

If we are to demonstrate gains from trade in the theory of comparative advantage, it is necessary to assume that:

• A)one country must have an absolute advantage in the production of both goods.
• B)one country cannot have an absolute advantage in the production of both goods.
• C)one country must be considerably larger than the other.
• D)a country must be relatively more efficient in the production of one of the goods.
• E)factors of production have to be free to move between countries.

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