(Table: Home and Foreign Prices for Manufacturing and Agriculture) Consider the information provided about the price of agriculture and manufacturing goods in two countries (Home and Foreign). If the two countries open their markets for trade, then:
A) Home has the comparative advantage in agriculture.
B) Home has the comparative advantage in manufacturing.
C) Foreign has absolute advantage in both goods.
D) Foreign has a comparative advantage in manufacturing.

Question

(Table: Home and Foreign Prices for Manufacturing and Agriculture) Consider the information provided about the price of agriculture and manufacturing goods in two countries (Home and Foreign). If the two countries open their markets for trade, then: 
A) Home has the comparative advantage in agriculture. 
B) Home has the comparative advantage in manufacturing. 
C) Foreign has absolute advantage in both goods. 
D) Foreign has a comparative advantage in manufacturing.

Quizplus · Accepted Answer

The Answer of (Table: Home and Foreign Prices for Manufacturing and Agriculture) Consider the information provided about the price of agriculture and manufacturing goods in two countries (Home and Foreign). If the two countries open their markets for trade, then: 
A) Home has the comparative advantage in agriculture. 
B) Home has the comparative advantage in manufacturing. 
C) Foreign has absolute advantage in both goods. 
D) Foreign has a comparative advantage in manufacturing.