The basics and gains from international trade under the theory of opportunity cost is determined by
A)Homogeneity of labours
B)The shape of the substitution curve or production possibility curve under different cost conditions
C)Imperfect competition in factor and commodity markets
D)Change in technology

Question

Quizplus · Accepted Answer

The theory of opportunity cost in international trade is primarily determined by the shape of the substitution curve or production possibility curve under different cost conditions. This curve illustrates the trade-offs between producing different goods, highlighting how countries can gain from specializing in the production of goods for which they have a lower opportunity cost and trading for others.

The Basics and Gains from International Trade Under the Theory