-According to the above table, if these two countries trade
A) Mexico should export tablets and the United States export TVs.
B) the United States should import tablets and Mexico should import TVs.
C) the United States should export tablets and Mexico should export TVs.
D) we cannot tell which country should export which good without knowing the amount of labor utilized in each country.

Question

-According to the above table, if these two countries trade
A) Mexico should export tablets and the United States export TVs. 
B) the United States should import tablets and Mexico should import TVs. 
C) the United States should export tablets and Mexico should export TVs. 
D) we cannot tell which country should export which good without knowing the amount of labor utilized in each country.

Quizplus · Accepted Answer

The correct answer is based on the concept of comparative advantage. If Mexico has a lower opportunity cost for producing TVs and the United States has a lower opportunity cost for producing tablets, then Mexico should specialize in exporting TVs and the United States should specialize in exporting tablets. Comparative advantage suggests that countries benefit from trade by specializing in the production of goods for which they have a lower opportunity cost, thereby maximizing efficiency and gains from trade.

-According to the Above Table, If These Two Countries Trade