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Mutually Beneficial Trade Will Occur Whenever the Terms of Trade

Question 22

Multiple Choice

Mutually beneficial trade will occur whenever the terms of trade between the trading partners is set at a level where:


A) each country can export a good at a price above the opportunity cost of producing the good in the domestic market.
B) each country can import a good at a price above the opportunity cost of producing the good in the domestic market.
C) each country can export a good at a price below the opportunity cost of producing the good in the domestic market.
D) each country will specialize in the production of those goods in which it has an absolute advantage.
E) each country will specialize in the production of those goods that it can produce at the lowest average cost.

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