Suppose that the world economy consists of Country A and Country B, both of which are of similar size. Both countries produce Good 1 and Good 2. Suppose Country A and Country B open for trade and the...

Q13

Extracted text: Suppose that the world economy consists of Country A and Country B, both of which are of similar size. Both countries produce Good 1 and Good 2. Suppose Country A and Country B open for trade and the world price for Good 1 is $15. This results in Country A importing 500 units of Good 1 from Country B. Which of the following must be true? Country A has comparative advantage in Good 2 Country B has comparative advantage in Good 1 Country B has comparative advantage in Good 2 Country A has comparative advantage in Good 1