Mutually beneficial trade cannot occur if production frontiers are:
A)equal but tastes are not
B)different but tastes are the same
C)different and tastes are also different
D)the same and tastes are also the same.

Question

Quizplus · Accepted Answer

Mutually beneficial trade is based on the principle of comparative advantage, which requires differences in opportunity costs. If both production frontiers and tastes are the same, there is no basis for trade because neither party has a comparative advantage in producing a good more efficiently than the other, and their demand patterns do not create a need for exchange.

Mutually Beneficial Trade Cannot Occur If Production Frontiers Are