Suppose that the United States and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, ________ will gain from that trade because ________.
A) both countries; consumption possibilities in both Cuba and the United States will lie outside their PPFs.
B) neither country; their consumption possibilities will not change.
C) only the United States; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change.
D) only Cuba; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change.

Question

Quizplus · Accepted Answer

When countries specialize in goods in which they have a comparative advantage and then trade, both countries can consume beyond their production possibilities frontiers (PPFs), leading to gains for both.

Suppose That the United States and Cuba Decide to Open