If the terms of trade between any two countries lie somewhere between their respective opportunity costs,then the effects of trade will include
A)Consumption outside the production possibilities curve for both countries.
B)Less output for both countries.
C)Less interdependence between the economies of the two countries.
D)An expansion of the production possibilities for both countries.

Question

Quizplus · Accepted Answer

When the terms of trade are between the opportunity costs of two countries, both can specialize in producing goods where they have a comparative advantage, allowing them to consume beyond their production possibilities curve.

If the Terms of Trade Between Any Two Countries Lie