The following production possibilities schedule shows the quantities of soybeans and oil that can each be produced in Canada and Mexico with one unit of equivalent resources.
TABLE 32-3
-Refer to Table 32-3.Mexico would not gain by producing and exporting oil and importing soybeans unless it received

Question

The following production possibilities schedule shows the quantities of soybeans and oil that can each be produced in Canada and Mexico with one unit of equivalent resources.
  TABLE 32-3
-Refer to Table 32-3.Mexico would not gain by producing and exporting oil and importing soybeans unless it received

Quizplus · Accepted Answer

To make it advantageous for Mexico to produce and export oil and import soybeans, Mexico needs to receive more than 3 bushels of soybeans per barrel of oil. This is because the opportunity cost of producing one unit of oil in Mexico is 4 bushels of soybeans, whereas in Canada, it is only 3 bushels of soybeans. Therefore, if Mexico were to produce and export one barrel of oil, it would give up the opportunity to produce 4 bushels of soybeans. Thus, for trading to be beneficial, Mexico needs to receive more than 3 bushels of soybeans per barrel of oil.

The Following Production Possibilities Schedule Shows the Quantities of Soybeans