Use the accompanying table to answer the following questions:
Table 3-6

-Refer to Table 3-6.If England and Spain specialize and trade based on the principle of comparative advantage,Spain will export which product to England?
A)bread
B)cheese
C)both bread and cheese
D)Spain cannot benefit from trade with England.

Question

Use the accompanying table to answer the following questions:
Table 3-6
 
-Refer to Table 3-6.If England and Spain specialize and trade based on the principle of comparative advantage,Spain will export which product to England?
A)bread 
B)cheese 
C)both bread and cheese 
D)Spain cannot benefit from trade with England.

Quizplus · Accepted Answer

According to the principle of comparative advantage, a country should specialize in producing the good in which it has a lower opportunity cost compared to other goods. From the table, we can see that Spain has a lower opportunity cost of producing cheese (1 unit of cheese requires 2 units of labor in Spain, but 3 units of labor in England) compared to bread (1 unit of bread requires 4 units of labor in Spain, but only 3 units of labor in England). Therefore, Spain should specialize in producing cheese and export it to England, while England specializes in producing bread and exports it to Spain.

Use the Accompanying Table to Answer the Following Questions