If individuals A and B can both produce only goods X and Y, and A does not have a comparative advantage in the production of either X or Y, then we know
A)A and B have the same opportunity costs of production for X and for Y.
B)the gains from trade will be large but only in one direction.
C)B has a comparative advantage in the production of both X and Y.
D)A must have lower opportunity costs of production for both goods.
E)B has an absolute advantage in the production of X and Y.

Question

Quizplus · Accepted Answer

If A does not have a comparative advantage in either production, it means that their opportunity costs for both goods are the same as B's. Therefore, both A and B have the same opportunity costs of production for X and Y.

If Individuals a and B Can Both Produce Only Goods