WACE Economics ATAR Practice Questions - WACE ATAR Economics Units 3 & 4 (SCSA Year 12 Assessment) Exam

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According to the principle of comparative advantage, mutually beneficial trade between two countries can take place whenever:

One country has an absolute advantage in all goods produced. Opportunity costs of producing goods differ between the two countries. Both countries have identical opportunity costs of producing all goods. Tariffs and import quotas are completely eliminated across both nations.

Correct Answer:

Opportunity costs of producing goods differ between the two countries.

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