Suppose that two countries engage in trade with one another and the production possibility model predicts that there will incredible gains from trade between the two countries.

A  A financial bubble an occur that causes production to be greater than predicted.

B  There can be productivity gains in one sector.

C  All of the resources will be transferred between the sectors in an economy.  This will effectively leave some resources to remain idle. This can cause productivity declines in the short-term.

D  All of the resources might not be able to transferred between the sectors in an economy.  This will effectively leave some resources to remain idle.

E  Countries won’t necessarily produce what they have comparative advantage in.