📚 Learning Guide
Comparative Advantage Analysis
easy

If Country A can produce 10 units of wine or 5 units of cheese with the same resources, and Country B can produce 6 units of wine or 2 units of cheese, which country has a comparative advantage in producing cheese?

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Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
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Choose the Best Answer

A

Country A

B

Country B

C

Neither Country A nor Country B

D

Both countries have the same advantage

Understanding the Answer

Let's break down why this is correct

Answer

To determine which country has a comparative advantage in producing cheese, we need to look at how much cheese each country gives up to produce wine. In Country A, if it chooses to produce one unit of cheese, it gives up producing 2 units of wine because it can make 10 units of wine or 5 units of cheese. In contrast, Country B gives up 3 units of wine to produce one unit of cheese since it can make 6 units of wine or 2 units of cheese. Since Country A gives up fewer units of wine than Country B to produce cheese, Country A has a comparative advantage in cheese production. Therefore, Country A should focus on making cheese while Country B should focus on making wine to maximize efficiency.

Detailed Explanation

Country B has a lower opportunity cost for cheese. Other options are incorrect because Some might think Country A is better at making cheese; This choice suggests that neither country is better at making cheese.

Key Concepts

opportunity cost
Topic

Comparative Advantage Analysis

Difficulty

easy level question

Cognitive Level

understand

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