Multiple Choice
Countries A and B currently consume 400 units of food and 400 units of textiles each and currently do not trade with one another.The citizens of country A have to give up one unit of food to gain two units of textiles,while the citizens of country B have to give up one unit of textiles to gain two units of food.Their production possibilities curves are shown. 
Under the theory of comparative advantage
A) The citizens of country A should make food and trade with the citizens of country B for textiles.
B) The citizens of country A should make textiles and trade with the citizens of country B for food.
C) There are no gains from trade in this example.
D) A is twice as good as B at making food and B is twice as good as A at making textiles.
Correct Answer:
Verified
Correct Answer:
Verified
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