Country A is an extremely efficient producer of tin.However,its climate and terrain makes it difficult to produce corn.According to the theory of comparative advantage,Country A should:
A)produce both tin and corn in order to remain self-sufficient.
B)import the resources needed to produce corn.
C)concentrate its production on tin and buy corn from an efficient producer.
D)watch the global market to see which product brings the highest price.

Question

Quizplus · Accepted Answer

According to the theory of comparative advantage, a country should specialize in producing the good or service in which it has a lower opportunity cost of production and trade with other countries to obtain goods and services it cannot efficiently produce. In this case, Country A is more efficient in producing tin and less efficient in producing corn. Therefore, it should concentrate its production on tin and import corn from a more efficient producer. This will increase the overall production and consumption in the global market and benefit both countries.

Country a Is an Extremely Efficient Producer of Tin