Assume that for Canada the opportunity cost of producing 1 television set is 2 bushels of wheat.Assume that for the U.S.the opportunity cost of producing 1 bushel of wheat is 2 television sets.All other things being equal:

A) Canada should export televisions and import wheat.
B) Canada should export wheat and import televisions.
C) the United States should export wheat and import televisions.
D) the United States should export televisions and import wheat.

According to the opportunity cost, Canada has a lower opportunity cost in producing wheat than in producing televisions (2 bushels of wheat vs 1 television). On the other hand, the United States has a lower opportunity cost in producing televisions than in producing wheat (2 televisions vs 1 bushel of wheat). Thus, it makes sense for Canada to specialize in producing and exporting wheat while importing televisions from the United States. Conversely, the United States should specialize in producing and exporting televisions while importing wheat from Canada. This leads to both countries producing what they have a comparative advantage in, and mutual gains from trade.