Certain kinds of tropical fruits are impossible to grow outdoors in the United States.Suppose,however,that in order to create jobs in Wyoming,the U.S.government offered extensive subsidies to firms to produce bananas.With the subsidies,firms could build greenhouses and offer the fruit at world prices.
A)The United States now has a comparative advantage in bananas.
B)The United States has a comparative advantage,but is not competitive.
C)The United States is competitive,but does not have a comparative advantage.
D)The United States has a comparative advantage and is competitive.
E)None of the above.

Question

Quizplus · Accepted Answer

The United States is competitive because subsidies allow it to produce bananas at world prices, but it does not have a comparative advantage because the production relies on government subsidies rather than lower opportunity costs.

Certain Kinds of Tropical Fruits Are Impossible to Grow Outdoors