(Table) from the Table, Assume That Canada Can Produce Both

Multiple Choice

(Table) From the table, assume that Canada can produce both timber and oil at an absolute advantage compared to Mexico, yet Canada is willing to trade its timber for Mexican oil. Why might Canada be willing to focus on timber and allow Mexico to produce oil?

A) Mexico has better trade routes north to Canada.
B) Canada sees this tradeoff as a form of charity.
C) Comparative advantage allows both countries to specialize in the items for which they have the lowest opportunity cost and allows for mutual benefits.
D) Canada is hoping to tax the oil heavily as it is imported.