Table 3-21
Assume that Jamaica and Norway can switch between producing coolers and producing radios at a constant rate. The following table shows the number of coolers or number of radios each country can produce in one day.
-Refer to Table 3-21. Jamaica should specialize in the production of
A)coolers and Norway should specialize in the production of radios.
B)radios and Norway should specialize in the production of coolers.
C)both goods and Norway should specialize in the production of neither good.
D)neither good and Norway should specialize in the production of both goods.

Question

Table 3-21
Assume that Jamaica and Norway can switch between producing coolers and producing radios at a constant rate. The following table shows the number of coolers or number of radios each country can produce in one day. 
-Refer to Table 3-21. Jamaica should specialize in the production of
A)coolers and Norway should specialize in the production of radios. 
B)radios and Norway should specialize in the production of coolers. 
C)both goods and Norway should specialize in the production of neither good. 
D)neither good and Norway should specialize in the production of both goods.

Quizplus · Accepted Answer

According to the principle of comparative advantage, a country should specialize in producing the good for which it has a lower opportunity cost. In this case, Jamaica has a lower opportunity cost for producing coolers (1/2 radio per cooler) compared to Norway (1 radio per cooler). Therefore, Jamaica should specialize in producing coolers and Norway should specialize in producing radios. This way, both countries can benefit from trading with each other and increase their overall output.

Table 3-21 Assume That Jamaica and Norway Can Switch Between Producing Coolers