Country A has great expertise in the production of planes and produces a large quantity of planes while country B has expertise in the production of automobiles and produces large quantities of cars. When the two countries trade planes for automobiles a. only country B benefits because through trade they can acquire planes that are more valuable than automobiles.
b. both countries improve allocative efficiency because they can now consume a more desirable combination of goods and services (planes and cars) through trade.
c. both countries improve allocative efficiency because they will both have the same number of cars and automobiles after trade.