Suppose Mexico can produce 5 autos or 10 corn.Suppose the United States can produce 4 autos or 20 corn.If opportunity costs are constant for both countries,then
A)the United States has a comparative advantage in corn production.
B)Mexico has a comparative advantage in corn production.
C)the United States cannot gain from trade with Mexico.
D)the United States has a comparative advantage in auto production.

Question

Quizplus · Accepted Answer

The United States has a comparative advantage in corn production because it can produce corn at a lower opportunity cost compared to autos (1 auto = 5 corn in the US, while 1 auto = 2 corn in Mexico).

Suppose Mexico Can Produce 5 Autos or 10 Corn