-The data in the above table demonstrates that gains from trade can be captured if
A) the United States produced both goods.
B) the United States produced steel in exchange for concrete produced in France.
C) the United States produced concrete in exchange for steel produced in France.
D) each country became self-sufficient, produced both goods for itself, and did not engage in trade.

Question

-The data in the above table demonstrates that gains from trade can be captured if
A) the United States produced both goods. 
B) the United States produced steel in exchange for concrete produced in France. 
C) the United States produced concrete in exchange for steel produced in France. 
D) each country became self-sufficient, produced both goods for itself, and did not engage in trade.

Quizplus · Accepted Answer

The principle of comparative advantage suggests that countries benefit from trade when they specialize in producing goods for which they have a lower opportunity cost and trade for other goods. If the United States has a comparative advantage in producing steel and France in producing concrete, then the United States producing steel and trading for concrete produced in France would capture the gains from trade.

-The Data in the Above Table Demonstrates That Gains from Trade