Question

question 40
suppose the united states has a comparative advantage over mexico in producing pork. the principle of comparative advantage asserts that

○ in order to consume beyond its ppf, the united states should produce a moderate quantity of pork and import the remainder of what it requires from mexico

○ in order to consume beyond its ppf, the united states should produce more pork than what it requires and export some of it to mexico

○ mexico has nothing to gain from importing united states pork

○ in order to consume beyond its ppf, the united states should refrain altogether from producing pork and import all of what it requires from mexico

Explanation:

The principle of comparative advantage states that a country should specialize in producing goods in which it has a comparative advantage (lower opportunity cost), produce more than its domestic needs, and export the surplus. The US has a comparative advantage in pork, so to consume beyond its PPF (by trading), it should produce more pork than needed and export the excess to Mexico. The first option suggests importing from Mexico (where US has advantage, so illogical), third is wrong as Mexico can gain from trade, fourth is against specialization.

Answer:

B. in order to consume beyond its PPF, the United States should produce more pork than what it requires and export some of it to Mexico