Suppose That Argentina and Chile Are Both Engaged in the Production

question 63

Multiple Choice

Suppose that Argentina and Chile are both engaged in the production of copper and wheat, and that Argentina has an absolute advantage in the production of both goods. If Chile has a lower opportunity cost for producing copper, then:

• A) Chile has a comparative advantage in wheat production, but there will be no gains from specialisation and trade
• B) Chile has a comparative advantage in the production of copper, but it is outweighed by Argentina's absolute advantage in wheat production
• C) Argentina still has a comparative advantage in the production of both goods
• D) Chile has a comparative advantage in the production of copper, and specialisation and trade between the two countries can be mutually beneficial

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Definitions:

Rank Ordering

A process of arranging items in a sequence based on their importance, priority, or quality.

Management Development

Is training to improve knowledge and skills in the management process.

Decision-Making

The process of selecting a course of action among multiple alternatives.

Corporate Strategy

The overarching plan that defines the long-term objectives and direction of a corporation, determining how to allocate resources to meet its goals.