Question

If the United States and Canada enter into a trade deal that allows Canada to trade oil to the U.S. and the U.S. to trade auto parts to Canada, who will
benefit and who will be at a disadvantage from this deal? (1 point)

Answer 1

Based on comparative advantage and the situation described above, the country that would benefit is Canada, while the country would be at a disadvantage in the United States.

What is Comparative Advantage?

Comparative Advantage is the economic term used to describe the economy's ability of a company or country to manufacture a specific commodity or service at a cheaper opportunity cost than its trading partners.

Therefore, currently, Canada is known to have many industries in the oil, such as petroleum and natural gas. Therefore, Canada can quickly produce and trade oil at cheaper production costs with the United States.

However, United States' top industry does not include auto part production; therefore, to trade auto parts with Canada would be expensive to the United States.

Hence, in this case, it is concluded that the correct answer is Canada would benefit, while the United States would be at a disadvantage.

Learn more about Comparative Advantage here: brainly.com/question/7045530