Two countries will have zero incentive to trade if their production possibilities curves are parallel straight lines because
A)The opportunity costs for both countries are the same.
B)One country has an absolute advantage in the production of both goods,thus providing that country with no incentive for trade.
C)One country has a comparative advantage in the production of both goods,thus providing that country with no incentive for trade.
D)An intersection of the two lines is not possible,and therefore a trade equilibrium is not possible.

Question

Quizplus · Accepted Answer

When two countries have parallel straight line production possibility curves, it means that they both have the same opportunity costs for producing both goods. This implies that there is no comparative advantage between the two countries, and they both have the same level of efficiency in producing goods. Therefore, there is no incentive for them to trade as they can produce the same goods at the same cost.

Two Countries Will Have Zero Incentive to Trade If Their