Asked by Tiara Singleton on May 08, 2024
Verified
The U.S.should
A) not engage in trade with Italy but produce beer and pizzas domestically.
B) import both beer and pizzas from Italy.
C) specialize in the production of beer and import pizzas from Italy.
D) specialize in the production of pizza and import beer from Italy.
E) not produce beer and pizza domestically.
Specialize
involves focusing on a particular area of production or service in which a person or country holds a comparative advantage, allowing for increased efficiency and output.
Import
The process of importing products or services from foreign countries for the purpose of selling them domestically.
Domestic
Pertaining to or occurring within a country’s borders, often in reference to products produced, services rendered, or economic activities.
- Gain insight into the principles of specialization and comparative advantage as they apply to international trading.
- Discriminate between the concepts of absolute and comparative advantage in the scope of international commerce.
Verified Answer
AS
avinash singhMay 12, 2024
Final Answer :
D
Explanation :
The U.S. should specialize in the production of pizza and import beer from Italy. Italy is famous for its traditional pizza while the United States is renowned for its beer. By specializing in the production of pizza, the U.S. can produce high-quality and flavorful pizzas that are competitive in the global market. Meanwhile, importing beer from Italy would save production costs and provide consumers with a unique Italian taste.
Learning Objectives
- Gain insight into the principles of specialization and comparative advantage as they apply to international trading.
- Discriminate between the concepts of absolute and comparative advantage in the scope of international commerce.