Question

Country X manufactors a product better and at a lower cost than country 10 points

Y? What should happen? *
Country X has solved the problem of scarcity.
Country Y should try to produce the same product.
Country X should discontinue making that product.
Country X should sell that product to Country Y.
Specialization increases trade because a country can get what it needs at 10 points

Answer 1

Country X should sell that product to Country Y.

Step-by-step explanation:

From the scenario above, we can conclude that country X has a competitive advantage over country Y in producing the product. Usually, this happen because country X has better resources, skilled workers, or climate that make it easier for them to manufacture that product.

This situation provide country Y with two options:

1. They could try to produce that product regardless of their disadvantage. If they decided to do this, the cost of that product will be higher and they will have to face the opportunity cost because they could allocate their resources into other product that they excel at.

or, they could choose option 2 as an option:

2. To buy that product from country X and focused their resources on other product that they have a competitive advantage on.

By doing this, country Y could obtain the product at a cheaper price and obtained a higher profit by manufacture and selling other products in which they have a competitive advantage.