Table 2-11

Table 2-11 shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland.
-Refer to Table 2-11.If the two countries specialize and trade, who should export motorcycles?
A)There is no basis for trade between the two countries.
B)Ireland
C)Scotland
D)They should both be importing motorcycles.

Question

Table 2-11
  
Table 2-11 shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland.
-Refer to Table 2-11.If the two countries specialize and trade, who should export motorcycles?
A)There is no basis for trade between the two countries. 
B)Ireland 
C)Scotland 
D)They should both be importing motorcycles.

Quizplus · Accepted Answer

Scotland should export motorcycles as it has a comparative advantage in producing them. Scotland has a lower opportunity cost of producing motorcycles compared to Ireland (4 labor hours per motorcycle in Scotland vs 6 labor hours per motorcycle in Ireland), which means it can produce motorcycles at a lower cost compared to Ireland. Therefore, it is better for Scotland to specialize in producing motorcycles and export them to Ireland.

Table 2-11 Table 2-11 Shows the Number of Labor Hours Required to of Labor