Suppose labor productivity differences are the only determinants of comparative advantage, and Brazil and Chile both produce only coffee and sugar. In Chile, either 5 units of coffee or 2 units of sugar can be produced in one day. In Brazil, a day of labor produces either 2 units of coffee or 1 unit of sugar. Which of the following statements is true?
a. Brazil has an absolute advantage in producing only coffee.
b. Brazil has an absolute advantage in producing only sugar.
c. Chile has an absolute advantage in the production of both coffee and sugar.
d. Chile has an absolute advantage in producing only coffee.
e. Brazil has an absolute advantage in the production of both coffee and sugar.
c
You might also like to view...
The above figure shows the marginal private benefit and marginal social cost of a college education. If society's external benefits from college graduates is $10,000 each, then without government intervention
A) no students will go to college. B) less than 10 million students will go to college. C) 10 million students will go to college. D) more than 10 million students will go to college.
Taxes can have different effects on different income groups. Which type of tax takes a larger percentage of income from high-income groups than from low-income groups?
(a) Progressive (b) Regressive (c) Proportional (d) Flat (e) Protective