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19


Assume that the opportunity cost of producing a pair of pants in Canada is 2 kilograms of

apples, whereas in China, it is 5 kilograms of apples. Which of the following is the result?


a. Canada has a comparative advantage over China in the production of pants.

b. China has a comparative advantage over Canada in the production of pants.

c. There can be mutual gains from trade to the two countries if Canada exports apples to China in exchange for pants.

d. Mutually beneficial trade CANNOT occur.

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