Final answer:
The statement is true. Fred has a comparative advantage in building sheds, and Sandy has a comparative advantage in building shelves. Therefore, Sandy would export shelves and import sheds.
Step-by-step explanation:
The question is based on the concept of comparative advantage in trade, which involves comparing the productivity of individuals in different tasks and determining what they should specialize in to maximize efficiency. Looking at Fred and Sandy's production times, we see that it takes Fred 40 hours to construct a shed and 10 hours to construct a shelf, whereas Sandy takes 32 hours for a shed and 4 hours for a shelf. To decide who should specialize in what, we should compare their opportunity costs.
Fred's opportunity cost for building one shed is four shelves because he could build four shelves in the time it takes him to build one shed (40 hours for a shed / 10 hours per shelf). Sandy's opportunity cost for building one shed is eight shelves (32 hours for a shed / 4 hours per shelf). Therefore, Fred has a lower opportunity cost for building sheds, meaning he is more efficient at building sheds than Sandy is, relatively speaking.
Similarly, we can compare the opportunity cost for building shelves. Fred's opportunity cost for building one shelf is 1/4 of a shed (10 hours per shelf / 40 hours per shed), and Sandy's opportunity cost for building one shelf is 1/8 of a shed (4 hours per shelf / 32 hours per shed). This makes Sandy more efficient at building shelves since she gives up less shed production time.
Based on these observations, it is clear that Fred has a comparative advantage in constructing sheds, and Sandy has a comparative advantage in constructing shelves. Therefore, the statement that if Fred and Sandy trade, then Sandy will export shelves and import sheds is True.