CFA Practice Question

There are 341 practice questions for this study session.

CFA Practice Question

Refer to the table below. Which of the following statements is true?

A. Gains from trade are possible for both countries.
B. Only Kiribati will benefit from trade with Tuvalu.
C. No gains from trade are possible for either Kiribati or Tuvalu.
Explanation: Gains from trade exist for both countries provided they trade according to comparative advantage.

User Contributed Comments 2

User Comment
mstroh314 Where is the comparative advantage? In both countries the tradeoff seems to be 4 coconuts for 1 mango.
tung mstroh314: you should compare country to country, not within country. Which is 'relatively' cheaper?
You need to log in first to add your comment.