Many of the toy products sold in Canada are imported from Taiwan because the Taiwanese can produce these products more effectively and efficiently than we can in Canada.This is an example of:
A)a bilateral free trade agreement.
B)the theory of comparative advantage.
C)the theory of absolute advantage.
D)a multilateral resource priority.

Question

Quizplus · Accepted Answer

This is an example of the theory of comparative advantage, which states that countries should specialize in producing goods or services in which they have a lower opportunity cost compared to other countries. In this case, Taiwan can produce toys more effectively and efficiently than Canada, so it makes sense for Canada to import these products from Taiwan instead of trying to produce them domestically.

Many of the Toy Products Sold in Canada Are Imported