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In a Two-Country,two-Commodity Framework,when One Country Has an Absolute Advantage

Question 3

Multiple Choice

In a two-country,two-commodity framework,when one country has an absolute advantage in the production of both commodities,_____.


A) autarky is always preferred to trade
B) differences in the opportunity cost of production between the two countries ensure that specialization and trade result in mutual gains
C) the country with the lowest opportunity cost of production is the least competitive in international markets
D) the countries gain from mutual trade as long as tastes differ across countries
E) the countries gain from specialization and exchange as long as they are the same size

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