Nation Alpha Has a Comparative Advantage in Product X and Nation

Nation Alpha has a comparative advantage in product X and nation Beta has a comparative advantage in product Y. Trade in the two products will only benefit the two nations if:

A) The exchange ratio of X for Y is fixed
B) The terms of trade increase in both nations
C) There is excess capacity in both economies
D) The prices charged for X and Y reflect their domestic opportunity costs

Correct Answer:

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