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Almia and Adjikistan are two open economies producing goods A and B. Many people inÃ¢â‚¬â€¹ Almia, including the
leadingÃ¢â‚¬â€¹ economists, are lobbying for trade. They feel that the country has a comparative advantage in good A that could be traded with good B from Adjikistan. The government of Adjikistan is also under pressure from various groups to encourage trade with Almia.Ã¢â‚¬â€¹ However, when both countries begin toÃ¢â‚¬â€¹ trade, gains from exporting good A to Adjikistan turn out to be much lower than whatÃ¢â‚¬â€¹ Almia’s economists had anticipated.
Which of theÃ¢â‚¬â€¹ following, ifÃ¢â‚¬â€¹ true, would explain thisÃ¢â‚¬â€¹ outcome?
A. With the introduction ofÃ¢â‚¬â€¹ trade, Adjikistan now has access toÃ¢â‚¬â€¹ Almia’s advanced production technology in A.
B. Industries in Almia have better environmental standards than Adjikistan.
C. The Almian workers are more efficient in producing good A than good B.
D. The opportunity cost of producing good A in Almia is very low.
E. Almia has a very large workforce.
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