If both Mexico and Canada produce shoes and cars but Mexico has a comparative advantage in shoes and Canada has a comparative advantage in cars, then Mexico should trade _____, and Canada should trade:

Question

Quizplus · Accepted Answer

According to the principle of comparative advantage, each country should specialize in the production and export of the goods for which it has a comparative advantage. In this case, Mexico has a comparative advantage in shoes, so it should trade shoes. Canada has a comparative advantage in cars, so it should trade cars.

If Both Mexico and Canada Produce Shoes and Cars but Mexico