What limits the terms of trade that a country would find acceptable?
A) The country's opportunity costs of production.
B) Whether the country has an absolute advantage at producing a good.
C) How much the country values the good for which it is trading.
D) When the country has a comparative advantage at producing both goods.

Question

Quizplus · Accepted Answer

The country's opportunity costs of production determine what it is willing to give up in order to produce a good, and therefore what terms of trade it would find acceptable. If the terms of trade are not favorable and require the country to give up more than it is willing to, it will not accept them.

What Limits the Terms of Trade That a Country Would