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AP® Macroeconomics

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Basis of Trade

APMACR-6DYLET

Suppose two countries could produce milk or rice. Use the list below to identify the different reasons countries should trade.

I. Countries should trade if they want to be self-sufficient

II. Countries should trade only if they have a comparative advantage in both rice and milk.

III. Countries should trade only if they have absolute advantage in rice and milk production.

A

I Only

B

II Only

C

III Only

D

I and II

E

None of the above