Country A can produce either 2 tons of cocoa or 4 cars with 10 units of labor. Country B can produce either 5 tons of cocoa or 25 cars with 10 units of labor. Based on this information, which of the following is true?
(a) Country A has an absolute advantage in the production of cocoa, while Country B has a comparative advantage in the production of cocoa
(b) Country A has a comparative advantage in the production of cocoa, while Country B has a comparative advantage in the production of cars
(c) Country A has an absolute advantage in the production of cocoa, while Country B has a comparative advantage in the production of cars
(d) Country A has a comparative disadvantage in the production of both goods
(e) Neither country has a comparative advantage in the production of either good
Ans: (b) Country A has a comparative advantage in the production of cocoa, while Country B has a comparative advantage in the production of cars
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