Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Focus on wheat production and trade for other goods
B
Produce as much of every good as possible
C
Specialize in goods where they have absolute advantage only
D
Avoid trade since they can produce all goods themselves
Understanding the Answer
Let's break down why this is correct
Answer
If Country A has a lower opportunity cost in producing wheat than Country B, it means that Country A gives up less of other goods to produce wheat. This situation is known as having a comparative advantage in wheat production. Therefore, Country A should focus on producing wheat and trade it with Country B for other goods that Country B can produce more efficiently. For example, if Country A produces wheat while Country B focuses on making cars, both countries can benefit from trading wheat for cars, allowing each to specialize in what they do best. This way, both countries can enjoy a greater variety of goods at lower costs.
Detailed Explanation
Country A should focus on making wheat. Other options are incorrect because Producing everything means wasting resources; Absolute advantage means you can produce more, but it doesn't mean you should.
Key Concepts
Comparative Advantage
Opportunity Cost
Absolute Advantage
Topic
Understanding Comparative Advantage
Difficulty
medium level question
Cognitive Level
understand
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