Almia and Adjikistan are two open economies producing goods A and B. Many people in Almia, including the
leading 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. However, when both countries begin to trade, gains from exporting good A to Adjikistan turn out to be much lower than what Almia’s economists had anticipated.
Which of the following, if true, would explain this outcome?
A. With the introduction of trade, Adjikistan now has access to 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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