Question

Which of the following statements is TRUE?A)Only Canada can benefit from trade because the United States has an absolute advantage inthe production of both soybeans and alfalfa. B)Trade will benefit both countries because the United States has a comparative advantage in the production of soybeans and Canada has a comparative advantage in the production of alfalfa. C)Trade will benefit both countries because the United States has a comparative advantage in the production of alfalfa and Canada has a comparative advantage in the production of soybeans. D)Trade will benefit neither country because the United States has an absolute advantage in the production of both soybeans and alfalfa, but Canada has a comparative advantage in theproduction of both soybeans and alfalfa

Answer 1

Option C statement is true, Trade will benefit both countries because the United States has a comparative advantage in the production of alfalfa and Canada has a comparative advantage in the production of soybeans.

Explanation:

Global trade in goods has increased rapidly since the Second World War and particularly in the last three decades. Food was no exception, as well as the global food network has become extremely complex and integrated, with over 1.1 trillion dollars in agricultural trading today.

In a peaceful world, a country can make reason to cultivate the few products that it is suitable to manufacture, export what it really is capable of producing to a competitive advantage and import what it should not grow. It is a "comparative advantage" and a key economic theory supporter.