Question ID#: 89110
The table below outlines the possible tradeoffs of producing units of cloth and corn for both Country A and Country B.
Country A cloth / corn
1: 0 // 4
2: 6 // 3
3: 14 // 0
Country B cloth / corn
1: 0 // 8
2: 8 // 6
3: 18 // 0
Which scenario best describes the effects of trade between the countries?
A) Both countries would gain if Country A traded corn for Country B’s cloth.
B) Both countries would gain if Country A traded cloth for Country B’s corn.
C) Country B would not gain from trade, because it has an absolute advantage in the production of both goods.
The given answer is (B), which would usually be the no-brainer. But, in case both countries select the second given production scenario, there will actually be a production that exceeds the production in the trade scenario. So I took answer (C). What do you guys think on that?
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