The top figure show the U.S. market for shoes and the bottom figure shows Brazil

Question

The top figure show the U.S. market for shoes and the bottom figure shows Brazil's market for shoes if here is no trade between the United States and Brazil. has a comparative advantage in producing shoes. With trade between Brazil and the United States, exports shoes. OA. Brazil: Brazil O B. The United States: the United States op. O C. The United States; Brazil 0 D. Brazil: The United States The price of shoes in the importing country and the quantity produced by the importing country O A. rises; increases OB, falls; increases C. falls, decreases O D. rises; decreases from this trade. O A. Only Brazil gains O B. Neither Brazil nor the United States gain O c. Both Brazil and the United States gain O D. Only the United States gains

Explanation / Answer

1) Brazil has a comparative advantage in producing shoes as it has an excess supply and a lower domestic price. With trade Brazil exports shoes. Hence answer is A.

2) The price of the shoe in importing country decreases and quantity produced decreases. c.

3) Both the countries gain from trade. C.

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