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QUESTION:
Suppose the world consists of two countries— Canada and Mexico. Furthermore, suppose there are only two goods—food and clothing. Which of the following statements is true?
a. If Canada has an absolute advantage in the production of food, then Mexico must have an absolute advantage in the production of clothing.
b. If Canada has a comparative advantage in the production of food, then Mexico must have a comparative advantage in the production of clothing.
c. If Canada has a comparative advantage in the production of food, it must also have a comparative advantage in the production of clothing.
d. If Canada has a comparative advantage in the production of food, Mexico might also have a comparative advantage in the production of food.
e. None of the answer choices are correct.
ANSWER:
If Canada has a comparative advantage in the production of food, then Mexico must have a comparative advantage in the production of clothing.
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