Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Country A has an absolute advantage in wheat production but Country B can produce it at a lower opportunity cost.
B
Country A should produce only wheat and not engage in trade at all.
C
Country B has a higher total production capacity than Country A.
D
Country A lacks the resources to produce any wheat.
Understanding the Answer
Let's break down why this is correct
Answer
Country A can produce more wheat than Country B using the same resources, which shows it has an absolute advantage in wheat production. However, it might still choose to import wheat from Country B because of comparative advantage. This means that Country B could be better at producing something else that it can trade for wheat, making it more efficient overall. For example, if Country B can produce 10 units of corn while only using resources to produce 5 units of wheat, it might focus on corn and trade some of it for wheat from Country A. By doing this, both countries can benefit and get more of what they need.
Detailed Explanation
Country A can make more wheat than Country B. Other options are incorrect because This idea suggests Country A should only make wheat; This option wrongly assumes Country B can produce more overall.
Key Concepts
Absolute Advantage
Comparative Advantage
Topic
Absolute and Comparative Advantage
Difficulty
easy level question
Cognitive Level
understand
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