Assume that the opportunity cost of producing a pair of pants in the United States is 2
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Assume that the opportunity cost of producing a pair of pants in the United States is 2 pounds of rice, while in China it is 5 pounds of rice. As a result,
a. the United States has a comparative advantage over China in the production of pants.
b. China has a comparative advantage over the United States in the production of rice.
c. mutual gains from trade can be realized by both countries if the United States exports rice to China in exchange for pants.
d. mutual gains from trade can be realized by both countries if the United States exports pants to China in exchange for rice.
e. all of the above except (c) are true.
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