Table 3-40

-Refer to Table 3-40. Germany should specialize in the production of
A)boats and import cars.
B)cars and import boats.
C)both goods and import neither good.
D)neither good and import both goods.

Question

Table 3-40
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-Refer to Table 3-40. Germany should specialize in the production of
A)boats and import cars. 
B)cars and import boats. 
C)both goods and import neither good. 
D)neither good and import both goods.

Quizplus · Accepted Answer

According to the table, Germany has a comparative advantage in producing cars with an opportunity cost of 2 boats (6 cars/3 boats), and it has a comparative disadvantage in producing boats with an opportunity cost of 3 cars (1 boat/3 cars). Therefore, Germany should specialize in producing cars and import boats, as it will be able to produce cars at a lower opportunity cost compared to producing boats.

Table 3-40 ​

Table 3-40