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(Table) from the Table, Assume That Canada Can Produce Both Canada’s Production Possibilities\text {Canada's Production Possibilities}

Question 241

Multiple Choice

(Table) From the table, assume that Canada can produce both timber and oil at an absolute advantage compared to Mexico, yet Canada is willing to trade its timber for Mexican oil. Why might Canada be willing to focus on timber and allow Mexico to produce oil? Canada’s Production Possibilities\text {Canada's Production Possibilities}
 Tons of TimberBarrels of Oil15010458012 \begin{array}{cc} \text { Tons of Timber}& \text {Barrels of }\\& \text {Oil}\\15 & 0 \\ 10 & 4 \\ 5 & 8 \\ 0 & 12\end{array}



Mexico’s Production Possibilities\text {Mexico's Production Possibilities}
Tons of Timber Barrels of Oil60422406 \begin{array}{cc} \text {Tons of Timber}&\text { Barrels of}\\&\text { Oil}\\6 & 0 \\ 4 & 2 \\ 2 & 4 \\ 0 & 6\end{array}


A) Mexico has better trade routes north to Canada.
B) Canada sees this tradeoff as a form of charity.
C) Comparative advantage allows both countries to specialize in the items for which they have the lowest opportunity cost and allows for mutual benefits.
D) Canada is hoping to tax the oil heavily as it is imported.

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