Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day.A Canadian worker,on the other hand,can produce 10 pairs of shoes or grow 20 apples per day.The United States should:
A)produce both goods,since they have an absolute advantage in both goods,and not trade.
B)produce only shoes,since they have a comparative advantage in the production of shoes,and not trade.
C)produce apples,since they have a comparative advantage in the production of apples,and not trade.
D)produce apples,since they have a comparative advantage in the production of apples,and trade for shoes.

Question

Quizplus · Accepted Answer

While the US has an absolute advantage in both goods, they have a comparative advantage in apples since their opportunity cost of producing apples is lower than Canada's. Therefore, the US should produce apples and trade with Canada for shoes, which they have a comparative disadvantage in producing. By specializing in the production of apples, the US can increase their overall output and efficiency, and both countries can benefit from trade through mutually beneficial exchange.

Suppose an American Worker Can Make 20 Pairs of Shoes