Table 3-6

-Refer to Table 3-6.If Denmark and Italy trade based on the principle of comparative advantage,which country will export or import each product
A)Denmark will import bread, and Italy will import cheese.
B)Denmark will import bread, and Italy will import bread.
C)Denmark will import cheese, and Italy will import bread.
D)Denmark will import cheese, and Italy will import cheese.

Question

Table 3-6
 
-Refer to Table 3-6.If Denmark and Italy trade based on the principle of comparative advantage,which country will export or import each product
A)Denmark will import bread, and Italy will import cheese. 
B)Denmark will import bread, and Italy will import bread. 
C)Denmark will import cheese, and Italy will import bread. 
D)Denmark will import cheese, and Italy will import cheese.

Quizplus · Accepted Answer

According to the principle of comparative advantage, a country should specialize in producing and exporting goods that it can produce at a lower opportunity cost than its trading partners. Looking at the table, we can see that Denmark has a lower opportunity cost for producing bread than for producing cheese, while Italy has a lower opportunity cost for producing cheese than for producing bread. Therefore, Denmark should specialize in producing bread and import cheese from Italy, while Italy should specialize in producing cheese and import bread from Denmark. Hence, the correct choice is C, where Denmark will import cheese, and Italy will import bread.

Table 3-6 -Refer to Table 3-6.If Denmark and Italy Trade Based on Italy