Consider the Following Information About the Production of Two Goods

question 70

Multiple Choice

Consider the following information about the production of two goods, X and Y, in two countries, A and B:
∙ In Country A it takes Xa units of resources to produce one unit of X and Ya units of resources to produce one unit of Y.
∙ In Country B it takes Xb units of resources to produce one unit of X and Yb units of resources to produce one unit of Y.
∙ Assume the amount of resources used to produce the goods in the two countries can be compared unambiguously.
TABLE 32-1
-Refer to Table 32-1. If the ratio Xa/Ya is less than the ratio Xb/Yb, then we can say with certainty that

• A) The opportunity cost of producing good X in Country A is less than in Country B.
• B) Country A has a comparative advantage in the production of good X.
• C) Country A has an absolute advantage in the production of good X.
• D) The opportunity cost of producing good X in Country A is higher than in Country B.
• E) Both A and B are correct.

---

Definitions:

Budgeting Formulas

Mathematical expressions or rules used to plan and control income and expenditure over a specified period.

Actual Results

Refers to the real, achieved outcomes of financial and operational activities within a specific period.

Cost Drivers

Factors that cause the cost of a product or service to change, such as materials, labor, and overhead expenses.

Vocational School

An educational institution that provides practical and skills-based training for specific careers or trades.