If the United States can produce 50 airplanes and 50,000 shirts in one year, while Mexico can produce 5 airplanes and 15,000 shirts in one year, then:
A) the United States will not benefit from trade with Mexico because the United States has an absolute advantage over Mexico in producing both goods.
B) trade is mutually beneficial because Mexico has a comparative advantage in producing airplanes, and the United States has a comparative advantage in producing shirts.
C) neither country would benefit from trade with the other.
D) trade is mutually beneficial because the United States has a comparative advantage in producing airplanes, and Mexico has a comparative advantage in producing shirts.
Correct Answer:
Verified
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