Suppose That a Worker in Radioland Can Produce Either 4

Suppose that a worker in Radioland can produce either 4 radios or 1 television per year,and a worker in Teeveeland can produce either 2 radios or 5 televisions per year.Each nation has 100 workers,and each country specializes according to the principle of comparative advantage.If Radioland trades 100 televisions to Teeveeland in exchange for 100 radios each year,then each country's maximum consumption of new radios and televisions per year will be

A) higher than it would be in the absence of trade because of the gains from trade.
B) the same as it would be in the absence of trade.
C) less than it would be in the absence of trade because neither country is specializing in the product for which it has a comparative advantage.
D) less than it would be in the absence of trade because Teeveeland has an absolute advantage in both goods and so it cannot benefit by trading with Radioland.

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free