Answer to Question #80720 in Microeconomics for bryan

Question

If two countries have differing opportunity costs of production for two goods, then:
a) Each country should specialise in the good for which it has a higher opportunity cost of production.
b) Only the country with an absolute advantage in the production of both goods stands to gain from trade.
c) Each country should purchase inputs from the other country in order to gain an absolute advantage.
d) Each country should specialise in the production of the good for which it has a relative advantage.

Answer 1

b) Only the country with an absolute advantage in the production of both goods stands to gain from trade.