Suppose England has a comparative advantage over the United States at producing tea. If this is true, then:
A) England should produce more tea than it wants and sell the rest to the United States.
B) England should produce a small amount of tea and buy the rest of the tea it wants from the United States.
C) England should buy all of the tea it wants from the United States.
D) the United States has nothing to gain from buying tea produced by England.

Question

Quizplus · Accepted Answer

According to the principle of comparative advantage, England should specialize in producing tea because it can produce it at a lower opportunity cost than the United States. Therefore, England should produce more tea than it wants and sell the rest to the United States, which can produce other goods and services more efficiently. Both countries will benefit from trade in this scenario.

Suppose England Has a Comparative Advantage Over the United States