The domestic opportunity cost of producing a television in the United States is 20 bushels of wheat. In Korea, the domestic opportunity cost of producing a television is 10 bushels of wheat. In this case:

Question

Quizplus · Accepted Answer

According to the principle of comparative advantage, a country should specialize in producing the good in which it has a lower opportunity cost and trade with other countries to obtain goods in which it has a higher opportunity cost. In this case, Korea has a lower opportunity cost of producing televisions (10 bushels of wheat) compared to the United States (20 bushels of wheat), so it has a comparative advantage in the production of televisions. Similarly, the United States has a lower opportunity cost of producing wheat compared to Korea. Therefore, if the United States imports televisions from Korea and Korea imports wheat from the United States, both countries can benefit from trade and obtain a higher total output of goods.

The Domestic Opportunity Cost of Producing a Television in the United