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If Canada Could Produce 1 Tonne of Potatoes or 0

Question 54

Multiple Choice

If Canada could produce 1 tonne of potatoes or 0.5 tonnes of wheat per worker per year,while Ireland could produce 3 tonnes of potatoes or 2 tonnes of wheat per worker per year,under what circumstances can there be mutual gains from trade?


A) there can be no mutual gains from trade in this situation
B) if Canada specializes in potatoes because of its comparative advantage in producing potatoes
C) if Canada specializes in wheat because of its absolute advantage in producing wheat
D) if Canada specializes in wheat because of its comparative advantage in producing wheat

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