Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.Country A has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.Which of the following is true?
A) Country B should produce tablets and Country A should produce iPods, and they could benefit from trade.
B) Country B should produce iPods and Country A should produce tablets, and they could benefit from trade.
C) Neither country can benefit from trade since no comparative advantage exists.
D) Because Country B has the absolute advantage in producing tablets, they should specialize in the production of tablets.

Question

Quizplus · Accepted Answer

Country A has a comparative advantage in producing iPods (10 iPods vs. 5 tablets per worker), while Country B has a comparative advantage in producing tablets (10 tablets vs. 2 iPods per worker). Therefore, Country A should produce iPods and Country B should produce tablets to benefit from trade.

Suppose That a Worker in Country a Can Make Either