Question 22

Encouraging more workers to pursue fishing would be most effective to increase Grand Coast's comparative advantage over Toland.

By encouraging more workers to pursue fishing, Grand Coast can increase its production in that sector, thereby enhancing its comparative advantage in fish relative to Toland, which is crucial for trade relations and economic benefit.

A) Raise taxes on factories and mills

Raising taxes on factories and mills would likely increase the cost of production, potentially leading to a decrease in output and efficiency. This could hinder Grand Coast's ability to compete effectively in both timber and fish markets, ultimately diminishing its comparative advantage.

B) Encourage more workers to pursue fishing

Encouraging more workers to pursue fishing directly increases the labor force dedicated to this sector, allowing Grand Coast to produce more fish. This specialization enhances Grand Coast's comparative advantage since it can produce fish more efficiently than Toland, making this option the most effective policy.

C) Maintain spending on infrastructure projects

While maintaining infrastructure spending can support economic growth, it does not directly impact the comparative advantage in the fishing industry. Without a targeted effort to increase labor in fishing, Grand Coast may not see a significant improvement in its competitive position against Toland.

D) Improve technology used to produce timber

Improving technology for timber production could enhance efficiency and output in that sector, but it does not address the need for comparative advantage in fishing. Since the question focuses on increasing Grand Coast's advantage specifically, this policy would not be as effective as directly boosting the fishing workforce.

Conclusion

The most effective policy for increasing Grand Coast's comparative advantage over Toland is to encourage more workers to pursue fishing, as it directly enhances the production capacity in that area. Other options either do not specifically target the fishing sector or may inadvertently weaken overall competitiveness. Thus, option B stands out as the most strategic approach to bolster Grand Coast's economic position in trade.