In a Two-Country,two-Commodity Framework,when One Country Has an Absolute Advantage

question 130

Multiple Choice

In a two-country,two-commodity framework,when one country has an absolute advantage in the production of both commodities,_____.

• A)autarky is always preferred to trade
• B)differences in the opportunity cost of production between the two countries ensure that specialization and trade result in mutual gains
• C)the country with the lowest opportunity cost of production is the least competitive in international markets
• D)the countries gain from mutual trade as long as tastes differ across countries
• E)the countries gain from specialization and exchange as long as they are the same size