Country A has a climate well-suited for agriculture, but few energy resources. Country B is arid but has plentiful access to oil. Which situation will benefit both countries the most?
Country A produces agricultural goods,
• A. Country B produces oil, and the countries engage in trade.
Country A produces agricultural goods,
• B. Country B produces oil, and the countries do not engage in trade.
Both countries produce agricultural
C. goods and oil, and the countries do not engage in trade.
Both countries produce agricultural
• D. goods and oil, and the countries engage in trade.
D. Both countries produce agricultural goods and oil, and the countries engage in trade.
In this scenario, Country A can specialize in agriculture and trade its surplus with Country B for oil. This way, both countries can benefit from each other's resources and enhance their overall economic prosperity. Trade will allow for the efficient allocation of resources and increase the overall wealth of both countries.