A-LevelEconomicsInternational economic issues9708/12 · May/June 2010 · Q181 Mark

The diagram shows production possibility curves for two countries, X and Y. What can be deduced from the diagram?

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ABoth countries can benefit from specialisation.

BCountry X has a higher opportunity cost than Y in producing good M.

CCountry Y has a comparative advantage in both goods.

DTrade between X and Y will not take place.

✓ Correct answer

D: Trade between X and Y will not take place.

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Topic: International economic issues, A-Level Economics (syllabus 9708). Multiple choice, 1 mark.
Source: A-Level Economics, May/June 2010 Paper 1 Variant 2, question 18.

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