Suppose the U.S. can produce 10 units of food and 5 units of clothing (or any such linear combination) and Canada can produce 6 units of food and 4 units of clothing (or any such linear combination)
If trade occurs between these two countries, which should produce more food and which more clothing?
The U.S. has a comparative advantage in food, 5/10 < 4/6. Canada has a comparative advantage in clothing, 5/10 < 4/6. The U.S. should produce food and Canada should produce clothing.
You might also like to view...
According to Gordon, a major problem with Keynes' "rigid nominal wage" theory of the business cycle is
A) a horizontal LM curve. B) it is not a market clearing theory. C) falling real wages are not countercyclical with business activity or Y. D) None of the above.
In the above figure, starting at E1, if there is a supply shock that is permanent, the
A. aggregate supply would shift to SRAS1 and LRAS0 would shift to LRAS1. B. aggregate supply would shift to SRAS1 and LRAS1 would shift to LRAS0. C. aggregate supply would shift to SRAS2 and LRAS0 would shift to LRAS1. D. aggregate supply would shift to SRAS1 and then return to SRAS0.
Refer to the short-run information provided in Figure 8.5 below to answer the question(s) that follow. 
Figure 8.5 Refer to Figure 8.5. If no drones are produced, total variable costs are
A. $0. B. $25. C. $50. D. indeterminate from this information.
In Solow's exogenous growth model, the principal obstacle to continuous growth in output per capita is due to
A) the declining marginal product of labor. B) the declining marginal product of capital. C) limits in the ability of government policymakers. D) too little savings.