-Refer to the above table. If opportunity costs are constant and the two countries trade
A)the United States should specialize in computers and Mexico in bicycles.
B)the United States should specialize in bicycles and Mexico in computers.
C)the United States should specialize in both bicycles and computers, and Mexico should specialize in neither.
D)there will be no trade because they are so different.

Question

-Refer to the above table. If opportunity costs are constant and the two countries trade
A)the United States should specialize in computers and Mexico in bicycles. 
B)the United States should specialize in bicycles and Mexico in computers. 
C)the United States should specialize in both bicycles and computers, and Mexico should specialize in neither. 
D)there will be no trade because they are so different.

Quizplus · Accepted Answer

If opportunity costs are constant, each country should specialize in the good for which it has a comparative advantage. The United States should specialize in computers and Mexico in bicycles if that is where their comparative advantages lie.

-Refer to the Above Table