Exhibit 21-3 Potatoes and wheat output (tons per day)

-If each nation in Exhibit 21-3 specializes in producing the good for which it has a comparative advantage,then:

Question

Exhibit 21-3 Potatoes and wheat output (tons per day)
 
-If each nation in Exhibit 21-3 specializes in producing the good for which it has a comparative advantage,then:

Quizplus · Accepted Answer

According to the principle of comparative advantage, each country should specialize in producing the good for which it has a lower opportunity cost. In this case, Ireland has a lower opportunity cost for producing potatoes (1/3 wheat per ton of potatoes compared to the United States' opportunity cost of 2 wheat per ton of potatoes), while the United States has a comparative advantage in producing wheat (2/3 potatoes per ton of wheat compared to Ireland's opportunity cost of 3 potatoes per ton of wheat). Therefore, Ireland should specialize in producing potatoes and the United States should specialize in producing wheat.

Exhibit 21-3 Potatoes and Wheat Output (Tons Per Day)