Argonia and Selenia have specialized in the production of industrial e

QUESTION

Argonia and Selenia have specialized in the production of industrial equipment and pharmaceuticals respectively. Argonia exports industrial equipment to Selenia, which in turn exports chemicals and medicines to Argonia.

According to the theory of comparative advantage, this mutually beneficial trade relationship best illustrates:

A. the significance of trade barriers.

B. a positive-sum game.

C. a first-mover advantage.

D. the advantages of mercantilism.

E. a zero-sum game.

ANSWER

B