If the opportunity costs 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

The fact that the opportunity costs of producing two goods differ across countries implies that one country has a comparative advantage in producing one of the goods, while the other country has a comparative advantage in producing the other good. Given this, both countries can potentially benefit by specializing in the production of the good in which they have a comparative advantage and trading for the other good. This is the principle of comparative advantage, which shows that mutually beneficial trade is possible even when countries have different opportunity costs of production.

If the Opportunity Costs of Production for Two Goods Is