Suppose That in Colombia One Unit of Labor Can Produce

question 91

Multiple Choice

Suppose that in Colombia one unit of labor can produce 8 tons of papayas or 2 tons of bananas. In Brazil, one unit of labor can produce either 4 tons of papayas or 1 ton of bananas. Given this information, which of the following statements is true?

• A) Columbia has a comparative advantage in producing papayas but not bananas.
• B) Columbia has a comparative advantage in producing papayas and bananas.
• C) These countries would increase combined consumption if they specialized and traded.
• D) These countries cannot gain from trading.

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Definitions:

Living Conditions

The circumstances or factors affecting the way in which people live, including their housing, health, and ability to meet basic needs.

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