If the opportunity cost of manufacturing automobiles is higher in Canada than in Britain and the opportunity cost of manufacturing airplanes is lower in Canada than in Britain,then Canada will:
A) export both airplanes and automobiles to Britain.
B) import both airplanes and automobiles from Britain.
C) export airplanes to Britain and import automobiles from Britain.
D) import airplanes from Britain and export automobiles to Britain.

Question

Quizplus · Accepted Answer

Since the opportunity cost of manufacturing automobiles is higher in Canada than in Britain, Canada would prefer to import automobiles from Britain. Similarly, since the opportunity cost of manufacturing airplanes is lower in Canada than in Britain, Canada would prefer to export airplanes to Britain. Therefore, Canada will export airplanes to Britain and import automobiles from Britain.

If the Opportunity Cost of Manufacturing Automobiles Is Higher in Canada