Alpha Can Produce Either 18 Tons of Oranges or 9

question 4

Multiple Choice

Alpha can produce either 18 tons of oranges or 9 tons of apples in a year, while Omega can produce either 16 tons of oranges or 4 tons of apples. Which of the following statements is true?

• A)Because Alpha has a comparative advantage in producing both goods, no mutual gains from trade are possible.
• B)Because Alpha has an absolute advantage in both goods, no mutual gains from trade are possible.
• C)If Alpha specializes in growing apples and Omega specializes in growing oranges, they could both gain from specialization and trade.
• D)If Alpha specializes in growing oranges and Omega specializes in growing apples, they could both gain from specialization and trade.
• E)Omega has an absolute advantage in the production of apples.