According to comparative advantage, trade between two countries allows

a. each of the trading countries to allocate its resources most efficiently.
b. will benefit all the industries in each of the countries.
c. maximizes the amount of inputs that are used in the production of all products.
d. guarantees that consumption levels will be equal in the two countries.

Adrawback of short-term contracting as an alternative to making a component in-house is thata. it is the most-integrated alternative to performing an activity so the principal company has no control over the agent. b. the supplying firm has no incentive to make any transaction-specific investments to increase performance or quality. c. it fails to allow a long planning period that individual market transactions provide. d. the buying firm cannot demand lower prices due to the lack of a competitive bidding process.