Nation Alpha has a comparative advantage in product X, and nation Beta has a comparative advantage in product Y. Trade in the two products will only beneﬁt the two nations if

Question

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To ensure that trade benefits both nations, the exchange ratio for X and Y must reflect their domestic opportunity costs. This means that each nation should export the product in which they have a comparative advantage and import the product in which they have a comparative disadvantage, based on their domestic opportunity costs. This allows both nations to specialize in the products they are relatively more efficient in producing, leading to increased output and mutually beneficial trade. The other options (A, B, and C) do not guarantee that trade will be mutually beneficial for the two nations.

Nation Alpha Has a Comparative Advantage in Product X, and Nation