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Asked by Doreen Oduro-Nyarko on May 19, 2024

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In order for mutually beneficial trade to occur between two otherwise isolated nations,

A) each nation must be able to produce at least one good absolutely cheaper than the other.
B) each nation must be able to produce at least one good relatively cheaper than the other.
C) each nation must face constant costs in the production of the good it exports.
D) one nation's production must be labor-intensive, while the other nation's production is capital-intensive.

Mutually Beneficial Trade

Trade agreements between parties that provide gains or advantages to all involved, enhancing each party's welfare.

Relative Cheaper

The comparison of the cost of one product or service to another, indicating that the former is less expensive.

Labor-Intensive

Describing a process or industry that requires a large amount of labor to produce its goods or services.

  • Familiarize oneself with the foundational aspects of global trading and the principle of comparative advantage.
  • Understanding the core principles and restrictions on profitable trade between different nations.
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LR
Lilian Rocel PastranaMay 20, 2024
Final Answer :
B
Explanation :
Mutually beneficial trade between two nations can occur when each nation has a comparative advantage (can produce a good at a lower opportunity cost) in the production of at least one good relative to the other. This does not require absolute cost advantages, constant costs, or specific labor or capital intensities.

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