When two nations have achieved identical relative prices of the two traded products, we have:
A) a standoff.
B) a stalemate.
C) international trade equilibrium.
D) absolute advantage once again.

Question

Quizplus · Accepted Answer

When two nations have achieved identical relative prices of the two traded products, it means they have reached an international trade equilibrium, where the amount of goods traded is stable and there are no incentives for either nation to change the terms of trade. This is a desirable outcome in international trade as it ensures the benefits of trade are being maximized for both nations. A and B are incorrect as they are not appropriate terms in this context, and D is incorrect as absolute advantage is not relevant in this scenario.

When Two Nations Have Achieved Identical Relative Prices of the Two