f Jane and Denise have identical, linear production possibility frontiers, are t

Question

f Jane and Denise have identical, linear production possibility frontiers, are there gains to trade? Explain If Jane and Denise have identical linear production possibility frontiers, then A. there are gains from trade because neither party is more productive than the other. 0 B. there are gains from trade because neither party has an absolute advantage over the other. OC. there may be gains from trade if the prices of the goods are different 0 D. there are no gains from trade because neither party has a comparative advantage over the other. O E. there may be gains from trade if the parties have different preferences.

Explanation / Answer

now when the ppf are linear and are identical emans that the opportunity cost of production for both the individuals is same, thus no one has any comparative advantage over other in terms of any good, thus there is no point of trade between two of them,

so answer is D

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