Country X can produce wheat more efficiently, while country Y can produce cars more efficiently. Even so, both countries decide against specialising and trading. What is a valid reason for this behaviour?
- AThe cost of transport is high relative to the opportunity cost differences between the countries.
- BThe exchange rate lies within the countries’ opportunity cost ratios.
- CThere is immobility of factors of production between the countries.
- DTrade is based on absolute rather than comparative advantage.