Although it lacks sources of timber and oil, Chablis has a plentiful supply of grapes for its many wineries. Which statement about Chablis is true?
A) It has a comparative advantage in wine production.
B) It has a comparative advantage in timber and oil production.
C) It has an absolute advantage in the production of wine.
D) It has an absolute advantage in timber and oil production.
E) It has no comparative or absolute advantages.

Question

Quizplus · Accepted Answer

The statement indicates that Chablis has a plentiful supply of grapes, which gives it a comparative advantage in wine production. This means that it can produce wine at a lower opportunity cost compared to other goods or compared to other regions that do not have as much access to grapes.

Although It Lacks Sources of Timber and Oil, Chablis Has