Suevania opens its doors to trade with Barvania.Barvania has a comparative advantage in the production of machinery.Hence,once trade occurs Suevania's consumers will buy ________ machinery and pay ________ before.

Question

Quizplus · Accepted Answer

According to the principle of comparative advantage, each country should specialize in producing the goods in which it has a lower opportunity cost, and trade for goods in which it has a higher opportunity cost. In this case, Barvania has a comparative advantage in producing machinery, which means it can produce machinery at a lower opportunity cost compared to Suevania. As a result, when trade occurs, Suevania will import machinery from Barvania at a lower price than it would have to produce it domestically. This means that Suevania's consumers will be able to buy more machinery at a lower price than before. Therefore, choice C is the most suitable answer.

Suevania Opens Its Doors to Trade with Barvania