When two countries are specialising and trading with each other, the gains from trade will tend to be greater when... a. There are economies of scale in production. b. Opportunity costs in the two countries are similar. c. Prices rise in both countries. d. Comparative advantages are eliminated. e. The production possibilities boundaries shift inward.

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Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.