- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 6. International Trade
- Subject 1. International Trade
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? |