JNU 2010

[Ankit Agrawal]

Q 3. If canada has a comparative advantage in the production of wheat compared to the united states, it means that:

(a) The opportunity cost of producing wheat is higher in canada than in the US
(b) the opportunity cost of producing wheat is lower in canada than in US
(c) with free trade, canada will export all of its wheat
(d) with free trade, the US will not produce any wheat

[taanya]

answer is option (b)

[Ankit Agrawal]

If the opportunity cost of producing wheat is lower in Canada, then why are the canadians producing wheat.

I am leaning towards A.

Justify it.