Use the following to answer question:

-(Figure: Comparative Advantage)Use Figure: Comparative Advantage.Eastland has a comparative advantage in producing:
A)oranges only.
B)peaches only.
C)both oranges and peaches.
D)neither oranges nor peaches.

Question

Use the following to answer question:

-(Figure: Comparative Advantage)Use Figure: Comparative Advantage.Eastland has a comparative advantage in producing:
A)oranges only. 
B)peaches only. 
C)both oranges and peaches. 
D)neither oranges nor peaches.

Quizplus · Accepted Answer

Eastland has a comparative advantage in producing the good for which it has the lower opportunity cost. The figure (not visible here) would typically show that Eastland can produce oranges at a lower opportunity cost compared to peaches, hence it has a comparative advantage in oranges. Comparative advantage is determined by opportunity cost, not by the absolute amount of goods produced.

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