-Refer to the above table. If opportunity costs are constant, each nation produces only the one good for which it has a comparative advantage, and trade can occur between the two countries
A)country X will produce product A and country Y will produce product B.
B)country X will produce product B and country Y will produce product A.
C)country X will refuse to trade with country Y since country X has a comparative advantage in both products.
D)country Y will refuse to trade with country X since country Y has a comparative advantage in both products.

Question

-Refer to the above table. If opportunity costs are constant, each nation produces only the one good for which it has a comparative advantage, and trade can occur between the two countries
A)country X will produce product A and country Y will produce product B. 
B)country X will produce product B and country Y will produce product A. 
C)country X will refuse to trade with country Y since country X has a comparative advantage in both products. 
D)country Y will refuse to trade with country X since country Y has a comparative advantage in both products.

Quizplus · Accepted Answer

Country X will produce product B and country Y will produce product A because each country should specialize in the good for which it has a comparative advantage.

-Refer to the Above Table