Figure 3-7
Refer to Figure 3-7
. According to the theory of comparative advantage, in which of the following scenarios would there be no gains from trade available for Fairyland and Merrywood?
1-If the opportunity cost of 1 bowl for Merrywood was 4 cups. (The production possibility frontier for Merrywood would look different; it would have the same slope as the production possibility frontier for Fairyland)
2-If the opportunity cost of 1 bowl for Merrywood was larger than the opportunity cost of 1 bowl for Fairyland. (The production possibilities frontier for Merrywood would look different; it would have a different slope.)
3-If Fairyland had an absolute advantage in the production of both goods.
4-There would always be gains from trade for Fairyland and Merrywood
Question 18igure 3-7airyland’s Production Possibilities Frontier10Toups10Icups9876m21 2345 678dow’s1 2 3 45 6 7efer to Figure 3-7. According to the theory of comparativend Mo
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