Figure 3-20
Canada's Production Possibilities Frontier
Mexico's Production Possibilities Frontier
-Refer to Figure 3-20.Canada has an absolute advantage in the production of
A)Good X and Mexico has an absolute advantage in the production of Good Y.
B)Good Y and Mexico has an absolute advantage in the production of Good X.
C)both goods and Mexico has an absolute advantage in the production of neither good.
D)neither good and Mexico has an absolute advantage in the production of both goods.

Question

Figure 3-20
Canada's Production Possibilities Frontier
Mexico's Production Possibilities Frontier  
-Refer to Figure 3-20.Canada has an absolute advantage in the production of
A)Good X and Mexico has an absolute advantage in the production of Good Y. 
B)Good Y and Mexico has an absolute advantage in the production of Good X. 
C)both goods and Mexico has an absolute advantage in the production of neither good. 
D)neither good and Mexico has an absolute advantage in the production of both goods.

Quizplus · Accepted Answer

Canada has a higher opportunity cost of producing Good Y than Mexico, meaning Mexico has an absolute advantage in producing Good Y. Similarly, Mexico has a higher opportunity cost of producing Good X than Canada, meaning Canada has an absolute advantage in producing Good X. Therefore, the answer is B: Good Y and Mexico has an absolute advantage in the production of Good X.

Figure 3-20 Canada's Production Possibilities Frontier