Even in a Situation Where Absolute Costs for Two Countries

question 28

Multiple Choice

Even in a situation where absolute costs for two countries and two products are identical, trade can be mutually beneficial if:

• A)tastes differ substantially between the two countries.
• B)economies of scale in the production of both products encourages specialization.
• C)a third product is introduced and paired with one of the former products.
• D)answers a.and b.
• E)none of the above.