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

Question

Quizplus · Accepted Answer

According to the theory of comparative advantage, Tinian should specialize in producing tin, which it can produce more efficiently than corn. It should then trade with other countries that can produce corn more efficiently. By focusing on their comparative advantage, Tinian can increase its overall output and benefit economically by trading with other countries. Therefore, the best choice is for Tinian to concentrate its production on tin and buy corn from an efficient producer.

The Tiny Nation of Tinian Is Extremely Efficient in the Mining