Figure 3-25
Chile's Production Possibilities Frontier
Colombia's Production Possibilities Frontier
-Refer to Figure 3-25.Chile should specialize in the production of
A)coffee and import soybeans.
B)soybeans and import coffee.
C)both goods and import neither good.
D)neither good and import both goods.

Question

Figure 3-25
Chile's Production Possibilities Frontier
Colombia's Production Possibilities Frontier  
-Refer to Figure 3-25.Chile should specialize in the production of
A)coffee and import soybeans. 
B)soybeans and import coffee. 
C)both goods and import neither good. 
D)neither good and import both goods.

Quizplus · Accepted Answer

Chile has a comparative advantage in producing soybeans since its production possibility frontier shows that it can produce more soybeans than coffee. Therefore, it should specialize in producing soybeans and import coffee to achieve the highest level of economic efficiency.

Figure 3-25 Chile's Production Possibilities Frontier