ppose the world consists of two countries - Canada and Mexico. Furthermore, suppose there are only two goods-food and eloth ich of the following statements is true? a. If Canada has an absolute advantage in the production of food, then Mexico must have an absolute advantage in the production of ciothin b. If Canada has a comparative advantage in the production of food, then Mexico must have a comparative advantage in the production of cothing. c. If Canada has a comparative advantage in the production of food, it must also have a comparative advantage in the production of clothing. d. If Canada has a comparative advantage in the production of food, Mexico might also have a comparative advantage in the production of fo e. None of the answer choices are correct.

The concept of **comparative advantage** is fundamental in international trade theory. In a simplified world with two countries and two goods, the principle states that each country should specialize in producing the goods for which it has a lower opportunity cost, leading to mutual benefits from trade. Let's evaluate each statement: **a.** *If Canada has an absolute advantage in the production of food, then Mexico must have an absolute advantage in the production of clothing.* - **Incorrect.** Absolute advantage refers to a country's ability to produce more of a good with the same resources compared to another country. If Canada has an absolute advantage in food, it doesn't necessarily mean Mexico has an absolute advantage in clothing. Mexico could have no absolute advantage or could be less efficient in both goods. **b.** *If Canada has a comparative advantage in the production of food, then Mexico must have a comparative advantage in the production of clothing.* - **Correct.** In a two-country, two-good model, if one country (Canada) has a comparative advantage in producing one good (food), the other country (Mexico) inherently has a comparative advantage in producing the other good (clothing). This mutual specialization is the basis for beneficial trade between the two countries. **c.** *If Canada has a comparative advantage in the production of food, it must also have a comparative advantage in the production of clothing.* - **Incorrect.** Typically, a country has a comparative advantage in producing one good and not the other. If Canada specializes in food due to its comparative advantage, it likely has a higher opportunity cost for producing clothing compared to Mexico. **d.** *If Canada has a comparative advantage in the production of food, Mexico might also have a comparative advantage in the production of food.* - **Incorrect.** In a two-country, two-good scenario, only one country can have a comparative advantage in a particular good. If Canada has it for food, Mexico cannot also have it for food. **e.** *None of the answer choices are correct.* - **Incorrect.** Statement **b** is correct. **Conclusion:** The correct statement is **b**. **Answer:** b. If Canada has a comparative advantage in the production of food, then Mexico must have a comparative advantage in the production of clothing.