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The Theory of Comparative Advantage Suggests That

Question 2

Multiple Choice

The theory of comparative advantage suggests that:


A) Both trading parties can gain if they specialize in producing the good in which they have an absolute advantage.
B) Both trading parties can gain if they specialize in producing the good for which they have the lower opportunity cost, and that all the gains from trade will accrue to the more productive party.
C) Both trading parties can gain if they each specialize in producing the good for which they have the higher opportunity cost.
D) Both trading parties can gain if they each specialize in producing the good for which they have the lower opportunity cost.
E) None of the above.

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