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Mairoon Mairoon
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6 years ago
Suppose the production possibilities for two countries, producing either food or clothing, are shown in the above figure. They can each produce any linear combination as well. Assuming that consumers place equal value on both of these goods and that free trade between these two countries is possible, gains from trade
A) are not possible.
B) exist because food is more expensive to produce in Canada than in the U.S.
C) exist because food is more expensive to produce in the U.S. than in Canada.
D) do not exist because the consumers in each country have set their marginal rate of substitution equal to their country's marginal rate of transformation.
Textbook 
Microeconomics

Microeconomics


Edition: 6th
Author:
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ChronosChronos
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6 years ago
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Mairoon Author
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#2
5 years ago
Great answer, great website
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