Final answer:
The correct answer is D. a comparative advantage, as each country benefits by specializing in the production of goods for which they have a lower opportunity cost relative to each other, which leads to gains from trade for both.
Step-by-step explanation:
The scenario described suggests that the United States and Switzerland are benefiting from trade based on their respective comparative advantages. The United States can grow more corn than Switzerland, indicating that the U.S. holds a comparative advantage in corn production. Conversely, Switzerland can produce watches more economically than the United States, showing that Switzerland has a comparative advantage in watch manufacturing.
In an economic context, when two countries enter an agreement to trade goods in which they have a comparative advantage, they both stand to gain from this exchange. Thus, the correct answer to the student's question is D. a comparative advantage. This outcome is not an economic union, which is a more integrated form of cooperation involving multiple areas of economic policy, nor is it merely a global exchange, which is a general term for international trade. It also doesn't represent an absolute advantage, which would only be the case if one country could produce all goods more efficiently than the other.