Question

State what the theory of comparative advantage forecasts: When there are two countries A
and B, and two goods are produced by them: good X and Y.
a) Trade between A and B will only take place if both countries are at a comparatively
similar stage in the development of their economies.
b) Trade can take place even if country A has an absolute advantage in both providing
that B chooses to specialize in the good in which it has the least comparative
disadvantage, and A specializes in the one in which it has the greater comparative
advantage.
c) Trade can only take place if country A has an absolute advantage in producing one
of the goods, and country B has an absolute advantage in producing the other.
d) None of the above.​

Answer 1

Answer:

State what the theory of comparative advantage forecasts: When there are two countries A and B, and two goods are produced by them: good X and Y. a) Trade between A and B will only take place if both countries are at a comparatively. ... of the goods, and country B has an absolute advantage in producing the other.