Alpha can produce either 18 tons of oranges or 9 tons of apples in a year, while Omega can produce either 16 tons of oranges or 4 tons of apples. Which of the following statements is true?
A) Because Alpha has a comparative advantage in producing both goods, no mutual gains from trade are possible.
B) Because Alpha has an absolute advantage in both goods, no mutual gains from trade are possible.
C) If Alpha specializes in growing apples and Omega specializes in growing oranges, they could both gain from specialization and trade.
D) If Alpha specializes in growing oranges and Omega specializes in growing apples, they could both gain from specialization and trade.
E) Omega has an absolute advantage in the production of apples.
Correct Answer:
Verified
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