Canada and the U.S.both produce wheat and computer software.Canada is said to have the comparative advantage in producing wheat if
A)Canada requires fewer resources than the U.S.to produce a bushel of wheat.
B)the opportunity cost of producing a bushel of wheat is lower for Canada than it is for the U.S.
C)the opportunity cost of producing a bushel of wheat is lower for the U.S.than it is for Canada.
D)the U.S.has an absolute advantage over Canada in producing computer software.

Question

Quizplus · Accepted Answer

Comparative advantage is determined by the opportunity cost of producing a good. In other words, if producing one good has a lower opportunity cost in terms of giving up producing another good, then a country has a comparative advantage in producing that good. Therefore, Canada has the comparative advantage in producing wheat if the opportunity cost of producing a bushel of wheat is lower for Canada than it is for the U.S.