Use the figure below to answer the following questions.
Table 2.3.1
The planets of Vulcan and Romulus each produce goods X and Y.
The following table gives points on their production possibilities frontiers.
-Refer to Table 2.3.1.Each country gains from trade if
A)Romulus specializes in both goods.
B)Vulcan specializes in both goods.
C)they both produce the goods in which they have an absolute advantage.
D)Vulcan specializes in good X and Romulus specializes in good Y.
E)Romulus specializes in good X and Vulcan specializes in good Y.

Question

Use the figure below to answer the following questions.
Table 2.3.1
The planets of Vulcan and Romulus each produce goods X and Y.
The following table gives points on their production possibilities frontiers. 
-Refer to Table 2.3.1.Each country gains from trade if
A)Romulus specializes in both goods. 
B)Vulcan specializes in both goods. 
C)they both produce the goods in which they have an absolute advantage. 
D)Vulcan specializes in good X and Romulus specializes in good Y. 
E)Romulus specializes in good X and Vulcan specializes in good Y.

Quizplus · Accepted Answer

Vulcan has an absolute advantage in producing good X, while Romulus has an absolute advantage in producing good Y. By specializing in their respective absolute advantages, they can produce more of each good and trade with each other to gain access to the good they do not specialize in. Therefore, Romulus specializing in X and Vulcan specializing in Y is the best choice for them to gain from trade.

Use the Figure Below to Answer the Following Questions