Asked by Cylas Kawika on May 30, 2024
Verified
If Mexico has a comparative advantage in the production of oil compared to France, then
A) Mexico also has an absolute advantage in the production of oil.
B) France has an absolute advantage in the production of oil.
C) Mexico can produce oil at a lower opportunity cost than France.
D) France cannot produce oil.
Comparative Advantage
The ability of an individual or group to produce a good or service at a lower opportunity cost than other producers.
Opportunity Cost
The cost of missing out on the next best alternative when making a decision.
- Discern the interaction between opportunity cost and the selection process in trading activities.
Verified Answer
KL
Kevin LeonardJun 02, 2024
Final Answer :
C
Explanation :
Comparative advantage refers to the ability of a country to produce a good at a lower opportunity cost than another country. It does not necessarily mean that the country has an absolute advantage (being able to produce more of a good with the same resources) or that the other country cannot produce the good at all.
Learning Objectives
- Discern the interaction between opportunity cost and the selection process in trading activities.