Countries Labor input (days) Output of Commodity X Output of Commodity Y U.S. 2
ID: 1237073 • Letter: C
Question
Countries Labor input (days) Output of Commodity X Output of Commodity YU.S. 2 24 4
Canada 2 8 2
Assuming constant costs in the neighborhood of their current levels of production, the exhibit shows the number of units of commodity X each country would have to forgo to produce the additional units of commodity Y indicated. Further assume that the only input is labor and that it remains fully employed. If there were unrestricted trade and specialization according to the law of comparative advantage:
Answer
a. the United States would export Y and Canada would export X.
b. the United States would export X and Canada would export Y.
c. the United States would export both X and Y.
d. the United States and Canada would each be self-sufficient in both X and Y.
Please help & explain.
Explanation / Answer
b. the United States would export X and Canada would export Y.