Suppose the United States Has a Comparative Advantage Over Mexico

question 8

Multiple Choice

Suppose the United States has a comparative advantage over Mexico in producing pork.The principle of comparative advantage asserts that

• A)the United States should produce more pork than what it requires and export some of it to Mexico.
• B)the United States should produce a moderate quantity of pork and import the remainder of what it requires from Mexico.
• C)the United States should refrain altogether from producing pork and import all of what it requires from Mexico.
• D)Mexico has nothing to gain from importing United States pork.

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Definitions:

Excise Tax

A tax levied on specific goods, services, and activities, such as tobacco, alcohol, and gambling, often used to discourage their use and generate government revenue.

Largest Source

Refers to the main or biggest origin of something, such as the largest source of revenue for a business or the largest source of pollution in an area.

Sales Tax

A tax levied on the cost (at retail) of a broad group of products.

Basic Source

Refers to the primary or fundamental origins of information or data used in research and analysis.