Two countries can gain from foreign trade if ?
Correct answer: D. A and C of above
- A. Cost ratios are different
- B. Tariff rates are different
- C. Price ratios are different
- D. A and C of above
Explanation
Trade creates gains when countries face different opportunity-cost ratios, which produce different relative price ratios and allow comparative advantage. Thus both A and C express the relevant condition.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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