Use the Following to Answer Question(s): the Production of Tires

question 42

Multiple Choice

Use the following to answer question(s) : The Production of Tires and Radios

-(Exhibit: The Production of Tires and Radios) Assuming constant costs in the neighborhood of their current levels of production, the exhibit shows the number of tires each country would have to forgo in order to produce the additional radios indicated.Further assume that the only input is labor and that it remains fully employed.We see from the table that Country Y:

• A) has an absolute advantage in the production of both goods and a comparative advantage in the production of tires.
• B) has an absolute advantage in the production of both goods and a comparative advantage in the production of radios.
• C) does not have an absolute advantage in the production of either good, but it has a comparative advantage in the production of tires.
• D) does not have an absolute advantage in the production of either good, but it has a comparative advantage in the production of radios.

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