In which of the following cases should the United States produce more noodles than it wants for its own use and trade some of those noodles to Italy in exchange for wine?
A)Americans know less than Italians know about cooking noodles.
B)The United States has an absolute advantage over Italy in producing noodles.
C)Italy has a comparative advantage over the United States in producing wine.
D)The opportunity cost of producing a gallon of wine is the same for Italy as it is for the United States.

Question

Quizplus · Accepted Answer

According to the principle of comparative advantage, countries should specialize in and produce the goods they can produce at a lower opportunity cost and trade with other countries for goods they cannot produce as efficiently. Since Italy has a comparative advantage in producing wine, it would be more efficient for the United States to produce more noodles than it needs and trade some of those noodles to Italy for wine. Option A is irrelevant and does not help determine the need for trade. Option B talks about absolute advantage, which does not necessarily lead to trade. Option D does not provide enough information to determine the need for trade.

In Which of the Following Cases Should the United States