Exhibit B-1 below shows the quantity of thing-a-ma-jigs or truffala fruit that can be produced by each country, if all of its resources are devoted to that product.

-Trade is not possible because Barbootland has an absolute advantage in the production of both goods.

Question

Exhibit B-1 below shows the quantity of thing-a-ma-jigs or truffala fruit that can be produced by each country, if all of its resources are devoted to that product.
 
-Trade is not possible because Barbootland has an absolute advantage in the production of both goods.

Quizplus · Accepted Answer

Trade can still be beneficial through comparative advantage, where each country specializes in producing the good for which it has a lower opportunity cost, leading to gains from trade even if one country has an absolute advantage in all goods.

Exhibit B-1 Below Shows the Quantity of Thing-A-Ma-Jigs or Truffala