George and Michael can gain from exchange
A) unless one has an absolute advantage in all goods.
B) if each specializes in the production of the good for which he has the higher opportunity cost.
C) if each specializes in the production of the good for which he has the lower opportunity cost.
D) unless they have different opportunity costs.

Question

Quizplus · Accepted Answer

George and Michael can gain from exchange if each specializes in the production of the good for which he has the lower opportunity cost. This allows each to produce what they are relatively more efficient at, leading to overall higher productivity and potential for beneficial trade.

George and Michael Can Gain from Exchange