Both Canada and the U.S. can produce equally tasty maple syrup. What determines which country will export maple syrup?
A) how the opportunity cost in Canada compares to the opportunity cost in the U.S.
B) how the costs of production in Canada compare to the costs of production in the U.S.
C) how the costs of labour in Canada compare to the costs of labour in the U.S.
D) how the costs of maple syrup in Canada compares to the cost of maple syrup in the U.S.

Question

Quizplus · Accepted Answer

The country with the lower opportunity cost of producing maple syrup will specialize in its production and export it. Opportunity cost is the key concept in comparative advantage, which determines trade patterns.