Both Countries Can Benefit from Trade When

question 117

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 specializes in producing the good for which it has a comparative advantage.
• C) each specializes in producing the good for which it has an absolute advantage.
• D) there are no trade barriers that are erected by either country.

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Definitions:

State

A political entity with a defined territory, government, and the capacity to enter into relations with other states.

Northwest Territory

Territory established by the Northwest Ordinance of 1787, covering what would become the states of Ohio, Indiana, Illinois, Michigan, Wisconsin, and part of Minnesota.

Slavery

Slavery is a system in which individuals are owned by others, deprived of personal freedom, and forced to perform labor or services.

Plantation Farming

An agricultural production system characterized by large-scale monoculture farming, often historically reliant on slave or cheap labor.