Question

Suppose there are only two goods in the world, shoes and wheat. If it is true that with its vast resources the U.S. could produce more wheat and shoes than Brazil than Group of answer choicesa.Both countries will be able to gain from specialization and trade as long as the opportunity costs of producing the two goods are different in Brazil than in the U.S.

b.Total production of wheat and shoes cannot be increased through specialization and trade.
c.Brazil will never have a comparative advantage and thus, can never gain from trading with the U.S.
d.Trade between Brazil and the U.S. will make the U.S. better off but will leave Brazil worse off.

Answer 1

The Correct answer is "A"

Step-by-step explanation:

International exchange depends on relative bit of leeway, not based on total bit of leeway. As we probably am aware, a nation has relative bit of leeway underway of the merchandise which it can create at lower opportunity cost than other country.It can have some expertise in the creation of that products where it has similar favorable position and fare it to different nations. What's more, import the great from different nations where creation it doesn't have similar bit of leeway. By doing this every nation can pick up from exchange.

In the above example, the facts may demonstrate that U.S. has supreme preferred position in creating both the merchandise, yet it doesn't imply that it has relative bit of leeway in both the products.

Along these lines, the two nations will have the option to pick up from specialization and exchange as long as the open door expenses of delivering the two products are diverse in Brazil than in the U.S.