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Production Advantage
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If Country A can produce 10 units of wheat or 5 units of cloth while Country B can produce 6 units of wheat or 3 units of cloth, which country has a comparative advantage in producing wheat?

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Choose the Best Answer

A

Country A

B

Country B

C

Neither country

D

Both countries equally

Understanding the Answer

Let's break down why this is correct

Answer

Both countries have the same opportunity cost for wheat, so neither has a comparative advantage in wheat. Country A can produce 10 wheat or 5 cloth, meaning it gives up 0. 5 cloth for each wheat unit. Country B can produce 6 wheat or 3 cloth, also giving up 0. 5 cloth for each wheat unit.

Detailed Explanation

Country A gives up 0.5 cloth for each wheat it makes, while B gives up 0.5 cloth as well. Other options are incorrect because Some think Country B is better because it produces more wheat; People might think no country has an advantage because the numbers look similar.

Key Concepts

Comparative Advantage
Topic

Production Advantage

Difficulty

easy level question

Cognitive Level

understand

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