For two individuals who engage in the same two productive activities,it is impossible for one of the two individuals to
A)have a comparative advantage in both activities.
B)have an absolute advantage in both activities.
C)be more productive per unit of time in both activities.
D)gain from trade with each other.

Question

Quizplus · Accepted Answer

According to the principle of comparative advantage, individuals should specialize in the activity in which they have the lower opportunity cost, which means that they have a comparative advantage in that activity. If two individuals engage in the same two productive activities, it is impossible for one of them to have a comparative advantage in both activities since they have the same set of skills and resources. Therefore, they can each have a comparative advantage in one activity, which will allow them to gain from trade with each other. It is also possible for one individual to have an absolute advantage in both activities or to be more productive per unit of time in both activities, but this does not affect the principle of comparative advantage.

For Two Individuals Who Engage in the Same Two Productive