Economics 9708 · AS & A Level · International trade and free trade

International trade and free trade — practice question

If every resource is used efficiently, country X can make 6 million tonnes of wheat or 2 million tonnes of steel, while country Y can make 4 million tonnes of wheat or 1 million tonnes of steel. From this information, what does the theory of comparative advantage indicate?

  • ACountry X should produce only steel.
  • BCountry X will not gain from international trade.
  • CCountry Y has no comparative advantage.
  • DCountry Y will not gain from international trade.

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