Assuming increasing-cost conditions, trade between two countries would NOT be likely if they have
A) identical demand conditions but different supply conditions.
B) identical supply conditions but different demand conditions.
C) different supply conditions and different demand conditions.
D) identical demand conditions and identical supply conditions.

Question

Quizplus · Accepted Answer

Trade between two countries under increasing-cost conditions is less likely if they have identical demand and supply conditions because there would be no comparative advantage for either country to trade; both would produce goods at similar costs and have similar demands, eliminating the incentive for trade.

Assuming Increasing-Cost Conditions, Trade Between Two Countries Would NOT Be