Suppose that the United States and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, _________will gain from that trade because_________
A) only Cuba; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change.
B) neither country; their consumption possibilities will not change.
C) only the United States; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change.
D) both countries; consumption possibilities in both Cuba and the United States will lie outside their PPFs.

Question

Quizplus · Accepted Answer

Both countries will gain from trade because they will be able to specialize in producing the goods in which they have a comparative advantage, leading to increased efficiency and higher levels of production. This will result in consumption possibilities for both countries that lie outside of their respective production possibility frontiers (PPFs), meaning they will be able to consume more goods than they could produce on their own.

Suppose That the United States and Cuba Decide to Open