Table 3-11
Assume that Falda and Varick can switch between producing wheat and producing cloth at a constant rate.

-Refer to Table 3-11.Varick has a comparative advantage in the production of
A) wheat.
B) cloth.
C) both goods.
D) neither good.

Question

Table 3-11
Assume that Falda and Varick can switch between producing wheat and producing cloth at a constant rate.
 
-Refer to Table 3-11.Varick has a comparative advantage in the production of
A) wheat. 
B) cloth. 
C) both goods. 
D) neither good.

Quizplus · Accepted Answer

Varick's opportunity cost of producing one unit of cloth is 2.5 units of wheat, while Falda's opportunity cost of producing one unit of cloth is 3 units of wheat. This means that Varick has a lower opportunity cost of producing cloth and therefore a comparative advantage in cloth production.

Table 3-11 Assume That Falda and Varick Can Switch Between Producing Wheat