Question

If there is no comparative advantage in the production of either of the two goods produced by countries 1 and 2, then: ________

a. each country should specialize in the production of a particular good.
b. there are no gains from specialization and trade between the two countries.
c. the benefits resulting from trade between the two countries are increased.
d. one country must be more productive In producing all goods than the other.
e. none of the above

Answer 1

b. there are no gains from specialization and trade between the two countries.

Step-by-step explanation:

If the two countries are producing goods with the same opportunity cost, then there is no need or advantage gained from the trade of goods between these two countries.

Usually, countries trade with each other if one has a comparative advantage of producing one good over the other trading country. Then in this case is can specialize in making that good and trade the excess to the other country.

However, in the case when two countries are producing apples and oranges. And opportunity cost producing orange for country 1 is one apple and same for country 2

Opportunity cost for Country 1 : 1 Apple = 1 Orange

Opportunity cost for Country 2 : 1 Apple = 1 Orange

Then countries will gain no additional benefit from specializing in one good.