Country A can grow wheat faster and cheaper than Country B. Country B can produce cars better than Country A.

Question

What should each country specialize in?(1 point)
Responses

Country A: Cars, Country B: Wheat
Country A: Cars, Country B: Wheat

Country A: Wheat & Cars, Country B: Cars & Wheat
Country A: Wheat & Cars, Country B: Cars & Wheat

Neither should trade
Neither should trade

Country A: Wheat, Country B: Cars
Country A: Wheat, Country B: Cars

Answer 1

Based on the information provided, Country A has a comparative advantage in wheat production (as it can grow wheat faster and cheaper), while Country B has a comparative advantage in car production (as it can produce cars better). Therefore, each country should specialize in the good for which they have a comparative advantage.

The correct response is:

Country A: Wheat, Country B: Cars