If nations have identical production possibilities frontiers it is possible for them to experience gains from trade if
A) they have the same tastes and preference
B) they have different tastes and preferences
C) they have different natural resources
D) they have constant opportunity costs

Question

Quizplus · Accepted Answer

If nations have identical production possibilities frontiers and the same tastes and preferences, they would produce the same goods at the same opportunity costs. Therefore, there would be no gains from trade. However, if they have different tastes and preferences, they could specialize in producing the goods they are relatively better at producing and trade with each other, thus achieving gains from trade.

If Nations Have Identical Production Possibilities Frontiers It Is Possible