Use the production possibilities data below for Honduras and Nicaragua to answer the following question(s).
Table 2-2

-Refer to Table 2-2. According to the law of comparative advantage, both Honduras and Nicaragua could gain if
A) Honduras produced all of the apples and oranges and Nicaragua did not produce anything.
B) Honduras specialized in producing apples, Nicaragua specialized in producing oranges, and they traded.
C) Honduras specialized in producing oranges, Nicaragua specialized in producing apples, and they traded.
D) Nicaragua and Honduras were both were self-sufficient and did not trade.

Question

Use the production possibilities data below for Honduras and Nicaragua to answer the following question(s).
Table 2-2
 
-Refer to Table 2-2. According to the law of comparative advantage, both Honduras and Nicaragua could gain if
A) Honduras produced all of the apples and oranges and Nicaragua did not produce anything. 
B) Honduras specialized in producing apples, Nicaragua specialized in producing oranges, and they traded. 
C) Honduras specialized in producing oranges, Nicaragua specialized in producing apples, and they traded. 
D) Nicaragua and Honduras were both were self-sufficient and did not trade.

Quizplus · Accepted Answer

According to the law of comparative advantage, countries should specialize in producing goods for which they have a lower opportunity cost and trade with each other to maximize economic benefits.

Use the Production Possibilities Data Below for Honduras and Nicaragua