Suppose Two Countries Have Similar Resources, Capital, and Skilled Labor

Multiple Choice

Suppose two countries have similar resources, capital, and skilled labor. If they produce more, the cost per unit of production for both goods declines as more goods are produced. The most efficient method to produce the products is for each country to

A) produce some of each product and not trade with each other.
B) specialize in one of the products and then trade extra production for the other product.
C) specialize in one of the products but not trade extra production for the other product.
D) produce some of each product and then trade with each other.
E) specialize in both products while hoping the other country is not successful in its specialization.