An economy makes two goods, X and Y. In the diagram, line ML is the economy’s production possibility curve, while line MN is its trading possibility curve. What is shown by the diagram?
- AThe economy’s consumers prefer good X to good Y.
- BThe economy’s consumers prefer good Y to good X.
- CThe economy has a comparative advantage in the production of good X.
- DThe economy has a comparative advantage in the production of good Y.