Question

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. import sweaters from Britain and export machinery to Britain.b. export sweaters to Britain and import machinery from Britain.c. import both sweaters and machinery from Britain. d. export both sweaters and machinery to Britain.

Answer 1

Answer:

.a. import sweaters from Britain and export machinery to Britain.

Explanation:

A lower opportunity cost of manufacturing a particular goods means that a country uses fewer inputs in production compared to other nations.  The country can produce more quantities of the product using similar factors of production. A lower opportunity cost in manufacturing will make a country's output cheaper compared to when that product is manufactured in other nations.

Varying production costs form the basis of international trade. A County imports commodities that are produced cheaply elsewhere and exports the goods it can manufacture at a lower cost. The united states can produce machinery at a lower cost than Britain.  Britain will be prudent to import machinery from the united states rather than produce.  Britain produces sweaters using fewer inputs that the US. The US will find importing  sweaters from Britain more economical compared to manufacturing.