Assume That Colombia Gives Up Three Motorcycles for Each Ton

question 26

Essay

Assume that Colombia gives up three motorcycles for each ton of coffee it produces, while Bolivia gives up seven motorcycles for each ton of coffee it produces.
A.Colombia has a comparative advantage in motorcycle production and should specialize in coffee.
B.Colombia has a comparative advantage in coffee production and should specialize in the production of motorcycles.
C.Colombia has a comparative advantage in coffee production and should specialize in coffee production.
D.Colombia has a comparative advantage in motorcycle production and should specialize in motorcycle production.

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Definitions:

Underproduction

The condition where the output is less than what is economically or socially optimal.

Producer Surplus

The difference between the amount producers are willing to supply goods for and the actual amount they receive by selling them.

Overproduction

The situation where more goods are produced than can be sold, leading to excess supply and often a drop in prices.

Boston Symphony Orchestra

A major American orchestra based in Boston, Massachusetts, known for its high-quality performances and recordings.