If Two Countries Agree to Specialize and Trade Based on Comparative

Multiple Choice

If two countries agree to specialize and trade based on comparative advantage,which of the following is most likely to be TRUE?

A) Both of the countries will consume outside their respective production possibilities curves.
B) One of the countries will end up receiving all of the gains from trade.
C) One of the countries will both consume and produce on its production possibilities curve.
D) Only one of the countries will produce on and consume outside its production possibilities curve.