Suppose that the US market for soybeans is not open to international trade. Currently, soybeans sell for $6.00 per bushel in the US and the world price for soybeans is $8.00 per bushel. This information implies that
A)the US has an absolute advantage in the production of soybeans and if the market opens to international trade, the US would export soybeans.
B)the US does not have an absolute advantage in the production of soybeans and if the market opens to international trade, the US would import soybeans.
C)the US has a comparative advantage in the production of soybeans and if the market opens to international trade, the US would export soybeans.
D)the US does not have a comparative advantage in the production of soybeans and if the market opens to international trade, the US would import soybeans.

Question

Suppose that the US market for soybeans is not open to international trade. Currently, soybeans sell for $6.00 per bushel in the US and the world price for soybeans is $8.00 per bushel. This information implies that
A)​the US has an absolute advantage in the production of soybeans and if the market opens to international trade, the US would export soybeans.
B)the US does not have an absolute advantage in the production of soybeans and if the market opens to international trade, the US would import soybeans.
C)​the US has a comparative advantage in the production of soybeans and if the market opens to international trade, the US would export soybeans.
D)​the US does not have a comparative advantage in the production of soybeans and if the market opens to international trade, the US would import soybeans.

Quizplus · Accepted Answer

The US has a comparative advantage in the production of soybeans because the domestic price is lower than the world price, indicating that the US can produce soybeans at a lower opportunity cost. If the market opens to international trade, the US would export soybeans.

Suppose That the US Market for Soybeans Is Not Open