Consider the United States' production of soy beans and running shoes. If the United States has an absolute advantage in the production of both goods compared to China,
A)both countries can gain from trade.
B)only China can gain from trade.
C)only the United States can gain from trade.
D)each country will be able to produce at a point beyond its PPF.
E)only the United States will be able to operate beyond its PPF.

Question

Quizplus · Accepted Answer

Even if the United States has an absolute advantage in both goods, both countries can still gain from trade if they specialize based on comparative advantage.

Consider the United States' Production of Soy Beans and Running