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If Individuals a and B Can Both Produce Only Goods

Question 93

Multiple Choice

If individuals A and B can both produce only goods X and Y, and A does not have a comparative advantage in the production of either X or Y, then we know


A) B has an absolute advantage in the production of X and Y.
B) A and B have the same opportunity costs for X and for Y.
C) B has a comparative advantage in the production of both X and Y.
D) the gains from trade will be large but only in one direction.
E) A must have lower opportunity costs of production for both goods.

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