Question

I. Two countries produce the same goods for the same opportinity cost

Answer 1

Answer:

A

Explanation:

II only. It is advantageous to trade if two countries produce different goods for different opportunity costs, which was choice II. The choices of I, III, and IV are reasons as to why you would NOT trade.

Answer 2

Answer:

A) II only

Explanation:

A company or country producing goods and services at a lower opportunity costs gain comparative advantage over other firms or nations. It means the country can offer the product to the market at a lower price than any others. A lower opportunity cost implies the benefits forfeited in the production costs less.

A low cost of production or cheaper inputs makes the opportunity cost of production low. A country that can manufacture certain goods and services at a lower price should produce in bulk for the export market. Similarly, the country should import what other countries can produce at a lower price. Trading from this perspective facilitates prudent use of the factors of production.