Table 3-24
Assume that England and Spain can switch between producing cheese and producing bread at a constant rate.

-Refer to Table 3-24. England should specialize in the production of
A)cheese and Spain should specialize in the production of bread.
B)bread and Spain should specialize in the production of cheese.
C)both goods and Spain should specialize in the production of neither good.
D)neither good and Spain should specialize in the production of both goods.

Question

Table 3-24
Assume that England and Spain can switch between producing cheese and producing bread at a constant rate.
​  ​
-Refer to Table 3-24. England should specialize in the production of
A)cheese and Spain should specialize in the production of bread. 
B)bread and Spain should specialize in the production of cheese. 
C)both goods and Spain should specialize in the production of neither good. 
D)neither good and Spain should specialize in the production of both goods.

Quizplus · Accepted Answer

According to the table, England has a comparative advantage in producing cheese as its opportunity cost of producing cheese (giving up bread production) is lower than Spain's opportunity cost of producing cheese (giving up bread production). Similarly, Spain has a comparative advantage in producing bread as its opportunity cost of producing bread (giving up cheese production) is lower than England's opportunity cost of producing bread (giving up cheese production). Therefore, England should specialize in producing cheese and Spain should specialize in producing bread to maximize their total output.

Table 3-24 Assume That England and Spain Can Switch Between Producing Cheese