-Refer to Exhibit 34-1.If country A is to specialize in the production of one of the two goods (and then trade that good with Country B),which good should it be and why? If Country B is to specialize in the production of one of the two goods (and then trade that good to with Country A),which good should it be and why?
A) Good X for Country A because it is the higher opportunity cost producer of good X; good Y for Country B because it is the higher opportunity cost producer of good Y.
B) Good Y for Country A because it is the lower opportunity cost producer of good Y; good X for Country B because it is the lower opportunity cost producer of good X.
C) Good X for Country A because it is the lower opportunity cost producer of good X; good Y for Country B because it is the lower opportunity cost producer of good Y.
D) Good Y for Country A because it is the higher opportunity cost producer of good Y; good X for Country B because it is the higher opportunity cost producer of good X.

Question

-Refer to Exhibit 34-1.If country A is to specialize in the production of one of the two goods (and then trade that good with Country B),which good should it be and why? If Country B is to specialize in the production of one of the two goods (and then trade that good to with Country A),which good should it be and why?
A) Good X for Country A because it is the higher opportunity cost producer of good X; good Y for Country B because it is the higher opportunity cost producer of good Y. 
B) Good Y for Country A because it is the lower opportunity cost producer of good Y; good X for Country B because it is the lower opportunity cost producer of good X. 
C) Good X for Country A because it is the lower opportunity cost producer of good X; good Y for Country B because it is the lower opportunity cost producer of good Y. 
D) Good Y for Country A because it is the higher opportunity cost producer of good Y; good X for Country B because it is the higher opportunity cost producer of good X.

Quizplus · Accepted Answer

Country A should specialize in the production of Good X because it has a lower opportunity cost for producing Good X compared to Good Y. Similarly, Country B should specialize in the production of Good Y because it has a lower opportunity cost for producing Good Y compared to Good X. This allows both countries to benefit from trade by specializing in the goods for which they have a comparative advantage.