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If Two Countries with Increasing Opportunity Costs Have Identical PPFs

Question 5

Multiple Choice

If two countries with increasing opportunity costs have identical PPFs but different tastes,


A) the countries will have identical relative commodity prices under autarky, and therefore there is no incentive to trade.
B) the countries will have different relative commodity prices under autarky, but there will still be no incentive for them to trade.
C) the countries will have different relative commodity prices under autarky, and each country can gain by exporting the good for which its consumers have the higher relative preference.
D) the countries will have different relative commodity prices under autarky, and each country can gain by exporting the good for which its consumers have the lower relative preference.

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