If capital in China is less productive than capital in Australia in agricultural production:
A)neither nation can benefit from trade
B)only China can benefit from trade in agricultural goods
C)only Australia can benefit from trade in agricultural goods
D)both nations can benefit from increased trade in agricultural goods

Question

Quizplus · Accepted Answer

Both nations can benefit from increased trade in agricultural goods because even if China's capital is less productive in agriculture, they can still produce goods at a lower cost due to lower labor costs. Australia can then import these goods at a lower price and specialize in producing goods that they are more productive in, leading to gains from trade for both nations.

If Capital in China Is Less Productive Than Capital in Australia