Table 3-38
Assume that England and Spain can switch between producing cheese and producing bread at a constant rate.

-Refer to Table 3-38. Spain should export
A)cheese and import bread.
B)bread and import cheese.
C)both goods and import neither good.
D)neither good and import both goods.

Question

Table 3-38
Assume that England and Spain can switch between producing cheese and producing bread at a constant rate.
​ 
-Refer to Table 3-38. Spain should export
A)cheese and import bread. 
B)bread and import cheese. 
C)both goods and import neither good. 
D)neither good and import both goods.

Quizplus · Accepted Answer

Spain has a comparative advantage in producing bread because its opportunity cost of producing one unit of bread is lower than England's (1/2 vs. 1/1). Therefore, Spain should specialize in producing bread and export it to England in exchange for cheese.

Table 3-38 Assume That England and Spain Can Switch Between Producing Cheese