If the domestic exchange ratio of the United States and that of Canada are identical, the United States should not trade with Canada even though the United States may have absolute advantage in all products.

Question

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If the domestic exchange ratio of the United States and that of Canada are identical, then the United States will not gain from trade with Canada, even if it has an absolute advantage in all products. This is because the United States can produce all goods more efficiently than Canada, but it cannot produce them all more efficiently relative to each other. Therefore, the United States will not be able to gain from trade by specializing in the production of goods in which it has an absolute advantage.

If the Domestic Exchange Ratio of the United States and That