For two people who are planning to trade two different goods, each will have a comparative advantage in a different good unless,
A)they have exactly the same opportunity cost.
B)they have agreed in advance on who will produce what and how much each will produce.
C)the terms of trade are such that neither can gain from trade.
D)one person has an absolute advantage in both products.

Question

Quizplus · Accepted Answer

The concept of comparative advantage states that each person has a lower opportunity cost in producing one good over the other. Therefore, unless their opportunity costs for producing each good are exactly the same, each person will have a comparative advantage in a different good.

For Two People Who Are Planning to Trade Two Different