(Table) Based on the Table $\text {Canada's Production Possibilities}$ $\begin{array} { c c } \text { Tons of Steel } & \text { Airplanes } \\ 15 & 0 \\ 10 & 4 \\ 5 & 8 \\ 0 & 12 \end{array}$

question 265

Multiple Choice

(Table) Based on the table: $\text {Canada's Production Possibilities}$
$\begin{array} { c c } \text { Tons of Steel } & \text { Airplanes } \\ 15 & 0 \\ 10 & 4 \\ 5 & 8 \\ 0 & 12 \end{array}$

$\text {Mexico's Production Possibilities }$

$\begin{array} { cc} \text {Tons of Steel}& \text {Airplanes}\\6 & 0 \\ 4 & 2 \\ 2 & 4 \\ 0 & 6 \end{array}$

• A) Canada has a comparative advantage in producing steel.
• B) Mexico has a comparative advantage in producing steel.
• C) Mexico has an absolute advantage over Canada in producing both steel and airplanes.
• D) Canada has a comparative advantage in producing airplanes.

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Definitions:

Comparative Advantage

The ability of a country or individual to produce a good or service at a lower opportunity cost than competitors.

Opportunity Cost

The cost of choosing one option over another, typically expressed as the value of the forgone alternative.

Output

The quantity of goods or services produced within a given timeframe.

Thinking At The Margin

The concept involves making decisions based on the additional benefit or cost of the next unit of production or consumption.