Suppose there are two countries, A and B. They can both make carpets and MP3 players. Suppose country A has an absolute advantage in producing both products. In addition, country B has a comparative advantage in producing carpets. Suppose both countries want to maximize the amounts of carpets and MP3 players. This implies that:
a. Country A will still profit from importing carpets from country B, even though A has an absolute advantage in their production.
b. Country A will produce both product itself.
c. Country A will be self-sufficient, and country B will produce carpets for self-consumption and purchase MP3 players from country A.
d. b and c are correct.
Ans: a
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