Test Bank for Principles of Microeconomics 6th Edition by Frank IBSN 0073517852

Page 195

139. You are the Minister of Trade for a small island country with the following annual PPC:

You are negotiating a trade agreement with a neighboring island with the following annual PPC:

As soon as you see the other island's PPC, you realize there are:

A. no gains from trade because your both have the same comparative advantage. B. no gains from trade because there is no difference in your ability to harvest coconuts. C. no gains from trade because the other island has an absolute advantage. D. gains from trade because your island has a comparative advantage in coconuts. AACSB: Analytic Blooms: Analyze Difficulty: 03 Hard


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