Asked by Miftahul Khaira on Jun 28, 2024

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If the opportunity cost of manufacturing machinery is lower in the United States than in Britain and the opportunity cost of manufacturing sweaters is higher in the United States than in Britain,then the United States will:

A) export both sweaters and machinery to Britain.
B) import both sweaters and machinery from Britain.
C) export sweaters to Britain and import machinery from Britain.
D) import sweaters from Britain and export machinery to Britain.

Opportunity Cost

The cost associated with the best foregone choice because of a decision.

Machinery

A category of physical hardware used in the production process, including tools, engines, and devices that perform various tasks.

Sweaters

Knitted garments intended to cover the torso and arms, providing warmth and fashioned from materials like wool, cotton, or synthetic fibers.

  • Learn the concept of comparative advantage and its pivotal role in deciding production specialization among individuals or countries.
  • Understand the principles behind international trade and the gains from trade.
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MJ
micaela jersey pobleteJun 29, 2024
Final Answer :
D
Explanation :
The United States has a comparative advantage in manufacturing machinery as its opportunity cost is lower than Britain. Therefore, it should export machinery to Britain. On the other hand, the opportunity cost of manufacturing sweaters is higher in the United States than in Britain, indicating that Britain has a comparative advantage in manufacturing sweaters. Hence, the United States should import sweaters from Britain. Therefore, option D is the best choice as it states that the United States will import sweaters from Britain and export machinery to Britain.