Reference: Ref 2-7 (Table: Production Possibilities for Italy and Belgium) According to the table on Production Possibilities for Italy and Belgium, Belgium should specialize in linen production because it:
A) has an absolute advantage in producing linen and pasta.
B) can do so at a greater opportunity cost.
C) has a comparative advantage in producing linen.
D) already can produce enough pasta to meet demand.

Question

Reference: Ref 2-7 (Table: Production Possibilities for Italy and Belgium) According to the table on Production Possibilities for Italy and Belgium, Belgium should specialize in linen production because it:
A) has an absolute advantage in producing linen and pasta. 
B) can do so at a greater opportunity cost. 
C) has a comparative advantage in producing linen. 
D) already can produce enough pasta to meet demand.

Quizplus · Accepted Answer

Belgium should specialize in linen production because it has a comparative advantage in producing linen, meaning it can produce linen at a lower opportunity cost than Italy. This is because it has a lower opportunity cost of producing linen in terms of the amount of pasta forgone compared to Italy.