If Tom and Di specialize in producing the goods in which he and she have a comparative advantage and they exchange goods, then _ .
A) each will gain because each can consume a combination of goods that is outside her/his production possibility frontier
B) one of them will gain and the other will lose
C) each will produce a combination of goods that is within her/his production possibility frontier
D) they will lose because they are no longer able to produce and consume both goods.

Question

Quizplus · Accepted Answer

When Tom and Di specialize in producing the goods in which they have a comparative advantage and exchange goods, each will gain because they can consume a combination of goods that is outside their individual production possibility frontier. This is because they are able to produce and exchange goods more efficiently than they would be able to produce both goods individually.

If Tom and Di Specialize in Producing the Goods in Which