Asked by Joshua Najera on May 07, 2024
Verified
The production possibilities for country X are either 6,000 bushels of soybeans or 10,000 bushels of wheat. The production possibilities for country Y are either 2,000 bushels of soybeans or 4,000 bushels of wheat. Which of the following is true?
A) Country Y should specialize in the growing of soybeans according to the principle of comparative advantage.
B) Country X is the least-cost producer of wheat.
C) The domestic opportunity cost of wheat production is lower in country Y.
D) The high-cost producer of soybeans is country X.
Comparative Advantage
The ability of an entity to produce a good or offer a service at a lower opportunity cost than its competitors, leading to more efficient international trade.
Domestic Opportunity Cost
The cost of forgoing the next best alternative use of resources within a particular country when choosing one economic action over others.
- Investigate economic data to uncover comparative and absolute advantages among various countries.
Verified Answer
SB
Shelby BrysonMay 11, 2024
Final Answer :
C
Explanation :
Country Y has to give up 2,000 bushels of soybeans to produce 4,000 bushels of wheat, which is a 1:2 ratio. Country X has to give up 6,000 bushels of soybeans to produce 10,000 bushels of wheat, a 3:5 ratio. Thus, the opportunity cost of producing wheat is lower in country Y, as they give up less soybeans per bushel of wheat produced compared to country X.
Learning Objectives
- Investigate economic data to uncover comparative and absolute advantages among various countries.