Suppose two countries, A and B, produce only two goods, computers and beans. Country A

has an opportunity cost of 200 pounds of beans for every computer it makes, and country B

has an opportunity cost of 500 pounds of beans for every computer.

Which statements support the theory of comparative advantage?

Choose exactly two answers that are correct.

A: Country A has a comparative advantage in the production of computers.

B: Country A has a comparative advantage in the production of beans.

C: Country B should export computers to country A.

D: Country B should import computers from country A.

Question

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Social Studies

7 July, 16:51

Suppose two countries, A and B, produce only two goods, computers and beans. Country A

has an opportunity cost of 200 pounds of beans for every computer it makes, and country B

has an opportunity cost of 500 pounds of beans for every computer.

Which statements support the theory of comparative advantage?

Choose exactly two answers that are correct.

A: Country A has a comparative advantage in the production of computers.

B: Country A has a comparative advantage in the production of beans.

C: Country B should export computers to country A.

D: Country B should import computers from country A.

+2

Answers (1)

Know the Answer?

Darius Duran · Answer 1

Letter A and Letter D are correct.

Comparative advantage is the ability of a country to produce services and goods for a lower opportunity cost if compared to its trade partners. The Comparative Advantage Theory states that a country should always specialize in the production of products or services that have a lower opportunity cost for them. In this situation, Country A has a comparative advantage in the production of computer, therefore Country B should import computers from country A.