If country A can produce both products X and Y more efficiently,that is with smaller amounts of resources than can country B:
A)mutually advantageous specialization and trade between A and B may still be possible
B)we can conclude that A is an "advanced" economy and B is "less developed"
C)it will necessarily be advantageous for B to import both X and Y from A
D)mutually advantageous specialization and trade between A and B will not be possible
E)it will necessarily be advantageous for A to import both X and Y from B

Question

Quizplus · Accepted Answer

Even if country A can produce both products X and Y more efficiently than country B, it may still be possible for the two countries to engage in mutually advantageous trade. Country A can focus on producing the good in which it has a comparative advantage (i.e., can produce relatively more efficiently) and trade with country B for the other good. This will allow both countries to consume a combination of goods that is beyond what they could produce domestically with their limited resources. Therefore, choice A is the best option.

If Country a Can Produce Both Products X and Y