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Two Areas, Europe and America, Can Produce Only Goods a and B

Question 62

Multiple Choice

Two areas, Europe and America, can produce only goods A and B, under constant costs as indicated below.What will be the result of free trade between the two areas (assuming no transportation costs) ? Two areas, Europe and America, can produce only goods A and B, under constant costs as indicated below.What will be the result of free trade between the two areas (assuming no transportation costs) ?   A) Europe will export A and B to America. B) Europe will import A and export B. C) Europe will import B and export A. D) Europe will import A and B from America. E) No trade will take place.


A) Europe will export A and B to America.
B) Europe will import A and export B.
C) Europe will import B and export A.
D) Europe will import A and B from America.
E) No trade will take place.

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