The following table summarizes the production relationships in Mexico and Guatemala to produce tomatoes and beer:Table 16.1
Hours of Labor Required to Produce

-Refer to Table 16.1. Use the following statements to answer this question. I. Trade between Mexico and Guatemala will allow Mexico to consume a combination of tomatoes and beer outside of Mexico's production possibilities frontier.
II) Trade between Mexico and Guatemala will allow Guatemala to consume a combination of tomatoes and beer outside of Guatemala's production possibilities frontier.
A) Both I and II are true.
B) I is true, and II is false.
C) I is false, and II is true.
D) Both I and II are false.

Question

The following table summarizes the production relationships in Mexico and Guatemala to produce tomatoes and beer:Table 16.1
Hours of Labor Required to Produce
 
-Refer to Table 16.1. Use the following statements to answer this question. I. Trade between Mexico and Guatemala will allow Mexico to consume a combination of tomatoes and beer outside of Mexico's production possibilities frontier.
II) Trade between Mexico and Guatemala will allow Guatemala to consume a combination of tomatoes and beer outside of Guatemala's production possibilities frontier.
A) Both I and II are true. 
B) I is true, and II is false. 
C) I is false, and II is true. 
D) Both I and II are false.

Quizplus · Accepted Answer

According to the table, Mexico has a comparative advantage in producing beer and Guatemala has a comparative advantage in producing tomatoes. Therefore, if they specialize in their comparative advantage and trade, they can consume a combination of tomatoes and beer outside of their respective production possibilities frontiers. This means that both statements I and II are true.

The Following Table Summarizes the Production Relationships in Mexico and Guatemala