Use the Following Scenario to Answer the Next Questions

question 62

Multiple Choice

Use the following scenario to answer the next questions:
Suppose that Canada, an industrialized nation, and Mexico, a developing nation, both produce clothes and cars. The real wage in Mexico is lower than in Canada. The countries have a free trade agreement. Each nation will find a comparative advantage.
-Which country's consumers will benefit from the free trade agreement?

• A)neither country
• B) Canada
• C) both countries
• D) Mexico
• E) not enough information to determine

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Definitions:

Opportunity Cost

The potential benefit missed out on when choosing one alternative over another; essentially, it's the cost of foregoing the next best option.

Individual Choice

Decision-making by individuals based on their preferences, resources, and trade-offs they face.

Productive Capacity

The maximum output that an economy can produce without increasing inflation, driven by available resources and technology.

Specialization

The focus of a business, region, or individual on producing a limited range of goods or services to gain greater efficiency and productivity.