Asked by Hazeline Sutana on Apr 24, 2024

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In a single year,the Netherlands can raise 100 tons of beef or produce 1,000 boxes of tulips.In the same growing season,Belgium can raise 50 tons of beef or produce 750 boxes of tulips.From this information,we know that:

A) the Netherlands has a comparative advantage in raising beef.
B) the Netherlands has a comparative advantage in raising tulips.
C) Belgium has a comparative advantage in raising beef.
D) Belgium has an absolute advantage in raising beef.

Comparative Advantage

The ability of an entity to produce goods or services at a lower opportunity cost than others, which is the basis for specialization and trade.

Netherlands

A country located in Northwestern Europe, known for its flat landscape, extensive canal systems, tulip fields, windmills, and cycling routes.

Belgium

A country located in Western Europe, known for its medieval towns, Renaissance architecture, and as headquarters of the European Union and NATO.

  • Employ the notions of comparative and absolute advantages in foreign trade and their significance in influencing trade arrangements.
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ZK
Zybrea KnightMay 02, 2024
Final Answer :
A
Explanation :
The concept of comparative advantage suggests that a country should specialize in producing the product in which it has a lower opportunity cost. In this scenario, the opportunity cost of producing 1 ton of beef in the Netherlands is equivalent to producing 10 boxes of tulips (100 tons of beef / 1,000 boxes of tulips), whereas in Belgium, the opportunity cost is equivalent to 15 boxes of tulips (50 tons of beef / 750 boxes of tulips). Therefore, the Netherlands has a lower opportunity cost in producing beef, and Belgium has a lower opportunity cost in producing tulips. Thus, the Netherlands has a comparative advantage in raising beef.