Consider the Following Information About the Production of Two Goods,X

question 26

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 X_a units of resources to produce one unit of X and Y_a units of resources to produce one unit of Y.
∙ In Country B it takes X_b units of resources to produce one unit of X and Y_b 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.
-Refer to Table 32-1.If the ratio / is less than the ratio / ,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.

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