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Questions and Answers
If country A can produce coffee at a lower opportunity cost than country B, what does this indicate about country A?
If country A can produce coffee at a lower opportunity cost than country B, what does this indicate about country A?
- Country A has an absolute advantage in the production of coffee. (correct)
- Country A has a comparative advantage in the production of tea.
- Country A has a comparative advantage in the production of coffee.
- Country A has an absolute advantage in the production of tea.
In the scenario where country A can produce coffee at a lower opportunity cost, what can be said about country B?
In the scenario where country A can produce coffee at a lower opportunity cost, what can be said about country B?
- Country B has no advantage in producing any goods.
- Country B has a comparative advantage in the production of coffee. (correct)
- Country B has a comparative advantage in the production of tea.
- Country B has an absolute advantage in the production of coffee.
Which statement accurately describes the relationship between opportunity cost and comparative advantage in this context?
Which statement accurately describes the relationship between opportunity cost and comparative advantage in this context?
- Opportunity cost is only relevant to absolute advantage.
- A lower opportunity cost implies comparative advantage. (correct)
- Opportunity cost is not related to comparative advantage.
- A higher opportunity cost implies absolute advantage.
