Suppose that Canada can produce 15 units of timber or 3 units of grain.Suppose that Mexico can produce 6 units of timber or 2 units of grain.Which of the following is CORRECT?
A)Mexico has a comparative advantage in grain production.
B)Mexico has an absolute advantage in timber production.
C)Canada has a comparative advantage in grain production.
D)The countries would find trade mutually beneficial at a trading ratio of 1 grain for 2 timber.

Question

Quizplus · Accepted Answer

Mexico has a comparative advantage in grain production because it has a lower opportunity cost for producing grain compared to Canada.

Suppose That Canada Can Produce 15 Units of Timber or 3