You are the Minister of Trade for a small island country with the following annual PPC:
You are negotiating a trade agreement with a neighboring island with the following annual PPC:
If the other island's delegate offers to give you 2 fish for every 1 coconut you give them, you will:
A) accept their offer because you do not have the comparative advantage in fish.
B) refuse their offer because the opportunity cost to you of a coconut is more than 2 fish.
C) accept their offer because you do not have an absolute advantage in fish.
D) refuse their offer because the opportunity cost to you of a coconut is less than 2 fish.
Correct Answer:
Verified
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