-Refer to Table 3-5. If Canada and Japan trade based on the principle of comparative advantage, at what price would the two countries trade?
A) at a price somewhere between the opportunity costs of the two countries
B) at a price exactly in the middle of the opportunity costs of the two countries
C) a price equal to Canada's opportunity cost
D) at a price equal to Japan's opportunity cost

Question

-Refer to Table 3-5. If Canada and Japan trade based on the principle of comparative advantage, at what price would the two countries trade?
A) at a price somewhere between the opportunity costs of the two countries 
B) at a price exactly in the middle of the opportunity costs of the two countries 
C) a price equal to Canada's opportunity cost 
D) at a price equal to Japan's opportunity cost

Quizplus · Accepted Answer

Trade based on comparative advantage occurs at a price between the opportunity costs of the two countries involved, allowing both to benefit from the trade.