George and Michael can gain from exchange
A) if each specializes in the production of the good for which he has the lower opportunity cost.
B) unless they have different opportunity costs.
C) unless one has an absolute advantage in all goods.
D) if each specializes in the production of the good for which he has the higher opportunity cost.

Question

Quizplus · Accepted Answer

According to the principle of comparative advantage, each person should specialize in producing the good or service for which they have a lower opportunity cost. This means that they can produce that good or service at a lower cost than their trading partner. By specializing and trading, both parties can benefit and increase their total output, leading to a more efficient use of resources.

George and Michael Can Gain from Exchange