Two parties can capture gains from specialization and trade whenever:
A)one party is twice as good at producing all goods as the other.
B)the opportunity costs of producing each good are the same for both parties.
C)both parties can produce equal amounts of both goods.
D)there is a difference in the endowment of resources in the two countries.
E)they both produce the same good or service, but in differing amounts.

Question

Two parties can capture gains from specialization and trade whenever:​
A)one party is twice as good at producing all goods as the other.
B)the opportunity costs of producing each good are the same for both parties.
C)both parties can produce equal amounts of both goods.
D)there is a difference in the endowment of resources in the two countries.
E)they both produce the same good or service, but in differing amounts.

Quizplus · Accepted Answer

Specialization and trade are beneficial when there is a difference in resource endowments, leading to different opportunity costs, allowing each party to specialize in what they are relatively more efficient at producing.

Two Parties Can Capture Gains from Specialization and Trade Whenever:​

Two Parties Can Capture Gains from Specialization and Trade Whenever: