Question

Assume, for Mexico, that the domestic price of oranges without international trade is lower than the world price of oranges. This suggests that, in the production o! oranges:________

a. Mexico has a comparative advantage over other countries and Mexico will export oranges.
b. Mexico has a comparative advantage over other countries and Mexico will import oranges.
c. Other countries have a comparative advantage over Mexico and Mexico will export oranges.
d. Other countries have a comparative advantage over Mexico and Mexico will import oranges.

Answer 1

Answer: Mexico has a comparative advantage over other countries and Mexico will export oranges

Explanation:

Based on the information given in the question, we can see that Mexico has a comparative advantage. This implies that Mexico can produce oranges at a lower opportunity cost when it is compared to other countries.

In this case, since Mexico has a comparative advantage over other countries, it implies that Mexico will export oranges.