Table 3-6

-Refer to Table 3-6. If England and Spain trade based on the principle of comparative advantage, which of the following is correct?
A)England will import bread and Spain will import cheese.
B)England will import bread and Spain will import bread.
C)England will import cheese and Spain will import bread.
D)England will import cheese and Spain will import cheese.

Question

Table 3-6
 
-Refer to Table 3-6. If England and Spain trade based on the principle of comparative advantage, which of the following is correct?
A)England will import bread and Spain will import cheese. 
B)England will import bread and Spain will import bread. 
C)England will import cheese and Spain will import bread. 
D)England will import cheese and Spain will import cheese.

Quizplus · Accepted Answer

Based on the principle of comparative advantage, each country should specialize in producing the good in which they have a lower opportunity cost, and trade for the other good. From the table, we can see that England has a lower opportunity cost for producing bread, while Spain has a lower opportunity cost for producing cheese. Therefore, England should specialize in producing bread and export it to Spain, while Spain should specialize in producing cheese and export it to England. This means that England will import cheese from Spain, and Spain will import bread from England. Therefore, the correct choice is C.

Table 3-6 -Refer to Table 3-6. If England and Spain Trade Based