-Refer to Exhibit 34-6.Which of the following is true?
A) Country A has a comparative advantage in both cheese and wine.
B) Country B has a comparative advantage in both cheese and wine.
C) Country A has a comparative advantage in cheese,and country B has a comparative advantage in wine.
D) Country B has a comparative advantage in cheese,and country A has a comparative advantage in wine.
E) none of the above

Question

-Refer to Exhibit 34-6.Which of the following is true?
A) Country A has a comparative advantage in both cheese and wine. 
B) Country B has a comparative advantage in both cheese and wine. 
C) Country A has a comparative advantage in cheese,and country B has a comparative advantage in wine. 
D) Country B has a comparative advantage in cheese,and country A has a comparative advantage in wine. 
E) none of the above

Quizplus · Accepted Answer

Comparative advantage is determined by which country can produce a good at a lower opportunity cost. Without specific data from Exhibit 34-6, the general principle is that if Country A can produce cheese at a lower opportunity cost than wine compared to Country B, then Country A has a comparative advantage in cheese, and Country B would have a comparative advantage in wine if it can produce wine at a lower opportunity cost than cheese compared to Country A.