QUESTION 7 Use the information in the table below to answer the 3 parts Production per unit of Labor : Canada United States Steel 100 150 Autos 100 450 Part 1: Which country has absolute advantage in...

QUESTION 7

1. Use the information in the table below to answer the 3 parts
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   

   Productionper unit of Labor:
   	Canada	United States
   Steel	100	150
   Autos	100	450

   
   
   
   
   Part 1:
   
   
   
   

   Which country has absolute advantage in Steel?

   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   

   	A.	US
   	B.	Canada
   	C.	Both
   	D.	Neither

   
   
   Part 2:
   
   
   
   
   
   

   Who has comparative advantage in Steel? Autos?

   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   

   	A.	US in autos, Canada in steel
   	B.	Canada in autos, US in steel
   	C.	Need more information

   
   
   Part 3:
   
   
   
   

   Given the Law of Comparative Advantage, how should each country specialize?

   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   

   	A.	The US should produce both, and Canada should find something they are good at.
   	B.	The US should produce autos, and Canada should produce steel
   	C.	The US should produce steel, and Canada should produce autos
   	D.	Canada would avoid trading with the US because the larger country will inevitably take advantage of the smaller.