Use the following scenario to answer the following questions:
Suppose that Canada,an industrialized nation,and Mexico,a developing nation,both produce clothes and cars.The real wage in Mexico is lower than in Canada.The countries have a free trade agreement.Each nation will find a comparative advantage.
-Which country benefits from this free trade agreement?

Question

Quizplus · Accepted Answer

Both countries can benefit from the free trade agreement as each nation will find a comparative advantage. Mexico can specialize in producing clothes due to its lower real wage, while Canada can specialize in producing cars. This specialization will lead to an increase in efficiency and productivity, lowering the cost of production, and ultimately increasing economic growth for both nations.

Use the Following Scenario to Answer the Following Questions