If the opportunity cost of manufacturing machinery is lower in the United States than in Britain and the opportunity cost of manufacturing sweaters is higher in the United States than in Britain,then the United States will:
A)export both sweaters and machinery to Britain.
B)import both sweaters and machinery from Britain.
C)export sweaters to Britain and import machinery from Britain.
D)import sweaters from Britain and export machinery to Britain.

Question

Quizplus · Accepted Answer

The United States has a comparative advantage in manufacturing machinery as its opportunity cost is lower than Britain. Therefore, it should export machinery to Britain. On the other hand, the opportunity cost of manufacturing sweaters is higher in the United States than in Britain, indicating that Britain has a comparative advantage in manufacturing sweaters. Hence, the United States should import sweaters from Britain. Therefore, option D is the best choice as it states that the United States will import sweaters from Britain and export machinery to Britain.

If the Opportunity Cost of Manufacturing Machinery Is Lower in the United