If the opportunity cost of manufacturing machinery is higher in Canada than in Britain and the opportunity cost of manufacturing sweaters is lower in Canada than in Britain,then Canada will:

Question

Quizplus · Accepted Answer

Since the opportunity cost of manufacturing machinery is higher in Canada than in Britain, it would be more beneficial for Canada to import machinery from Britain. Similarly, since the opportunity cost of manufacturing sweaters is lower in Canada than in Britain, it would be more beneficial for Canada to manufacture and export sweaters to Britain. Thus, Canada should export sweaters to Britain and import machinery from Britain. Choice A and D are not correct as they involve Canada exporting both machinery and sweaters to Britain, which is not efficient given the opportunity costs in each country. Choice B is not the best option as it would result in Canada missing out on the opportunity to export its relatively cheap and efficient sweater manufacturing.

If the Opportunity Cost of Manufacturing Machinery Is Higher in Canada