📚 Learning Guide
Comparative and Absolute Advantage
medium

Country A can produce either 10 units of wine or 5 units of cheese using the same resources. Country B can produce either 6 units of wine or 2 units of cheese. Which country has a comparative advantage in cheese production?

Master this concept with our detailed explanation and step-by-step learning approach

Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
Explore Topic

Choose the Best Answer

A

Country A

B

Country B

C

Neither country

D

Both countries have the same advantage

Understanding the Answer

Let's break down why this is correct

Answer

To find out which country has a comparative advantage in cheese production, we need to look at how much each country gives up to produce cheese instead of wine. Country A can make 10 units of wine or 5 units of cheese, so for every unit of cheese it produces, it gives up 2 units of wine. Country B can make 6 units of wine or 2 units of cheese, meaning it gives up 3 units of wine for each unit of cheese. Since Country A gives up fewer units of wine to produce cheese compared to Country B, it has the comparative advantage in cheese production. Therefore, Country A should focus on making cheese, while Country B should focus on wine.

Detailed Explanation

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

Key Concepts

Comparative Advantage
Opportunity Cost
Trade Benefits
Topic

Comparative and Absolute Advantage

Difficulty

medium level question

Cognitive Level

understand

Ready to Master More Topics?

Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.