Below is some hypothetical data for the countries of Canada and Mexico.(Assume that Canada has 10 million workers per month available and Mexico has 20 million. )
Canada's Production Possibilities
(Output in millions of bushels per month)
Mexico's Production Possibilities
(Output in millions of bushels per month)
Output Before Trade
(Output in millions of bushels per month)

-Refer to the information above to answer this question.In what product does Canada and Mexico have a comparative advantage?

Question

Below is some hypothetical data for the countries of Canada and Mexico.(Assume that Canada has 10 million workers per month available and Mexico has 20 million. )
Canada's Production Possibilities
(Output in millions of bushels per month)
  Mexico's Production Possibilities
(Output in millions of bushels per month)
  Output Before Trade
(Output in millions of bushels per month)
 
-Refer to the information above to answer this question.In what product does Canada and Mexico have a comparative advantage?

Quizplus · Accepted Answer

Comparative advantage is the ability of a country to produce a specific good or service at a lower opportunity cost than another country. Looking at the data, Canada can produce more rye than Mexico and Mexico can produce more beans than Canada. However, when comparing the production possibilities of both countries, it can be seen that for rye, Canada's opportunity cost is lower than Mexico's, meaning they have a comparative advantage in this product. On the other hand, for beans, Mexico's opportunity cost is lower than Canada's, so they have a comparative advantage in beans. Therefore, Canada has a comparative advantage in rye and Mexico has a comparative advantage in beans.

Below Is Some Hypothetical Data for the Countries of Canada