Suppose the opportunity cost is a constant 500 TV sets for 1 car in Canada and 1,000 TV sets for 8 cars in Mexico.Then,if both countries specialize in accordance with their comparative advantage,the production of 1,000 extra TV sets in one country and 1,000 fewer TV sets in the other would imply that the world as a whole can have

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If Canada specializes in producing TV sets and Mexico specializes in producing cars, then the opportunity cost for Canada to produce 1,000 extra TV sets will be 2 cars (since Canada sacrifices 500 TV sets for 1 car). On the other hand, the opportunity cost for Mexico to produce 1,000 fewer TV sets will be 1/4 car (since Mexico gains 8 cars for 1,000 TV sets).

Therefore, by trading 1,000 TV sets, Canada can gain 2 cars and Mexico can gain 1/4 car. In total, the world will have an extra 2 1/4 cars (2 cars from Canada and 1/4 car from Mexico). To get a total of 6 more cars, this trade would need to occur 8 times, hence the answer is B) 6 more cars.

Suppose the Opportunity Cost Is a Constant 500 TV Sets