CFA Practice Question

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CFA Practice Question

Assume that in Canada the opportunity cost of producing 1 television set is 2 bushels of wheat. Assume that in the U.S. the opportunity cost of producing 1 bushel of wheat is 2 television sets. Other things being equal, ______
A. Canada should import wheat and export televisions.
B. the U.S. should import wheat and export televisions.
C. the U.S. should import both televisions and wheat.
Explanation: Since the opportunity cost of producing a television set in the U.S. (1/2 bushel of wheat) is less than the opportunity cost of producing a television set in Canada (2 bushels of wheat), the U.S. has a comparative advantage in television production.

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