Multiple Choice
Use the information below to answer the following questions.
Fact 2.3.2
Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in a hour.
-Complete the following sentence.Given Fact 2.3.2,
A) there will be gains from trade if Agnes specializes in the production of X and Brenda in Y.
B) there will be gains from trade only if Agnes becomes faster at producing X.
C) there will be gains from trade, no matter what Brenda and Agnes specialize in, as long as they specialize.
D) there will be no gains from trade because Agnes has an absolute advantage.
E) there will be gains from trade only if Agnes specializes in the production of Y and Brenda in X.
Correct Answer:
Verified
Correct Answer:
Verified
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