If the opportunity cost of production for two goods is different between two countries, then
A) trade cannot benefit either country.
B) only one country can be made better off by trade.
C) mutually beneficial trade is possible.
D) trade will only benefit both countries if one can lower its opportunity costs.

Question

Quizplus · Accepted Answer

Differences in opportunity costs between two countries can allow for mutually beneficial trade. Each country can specialize in producing the good with lower opportunity cost and trade for the good with the higher opportunity cost. This can increase overall efficiency and production for both countries, resulting in gains from trade.

If the Opportunity Cost of Production for Two Goods Is