The table above displays the amount Country A and Country B could produce if they focused all their resources and attention on producing either apples or bananas. They wish to enter into a trade agreement, and they are discussing on which country should focus on producing which fruit. Using the table above, which country should produce bananas and why? Remember to take absolute and comparative advantage into account when making this decision. (1 point) Responses Country A since it has the absolute advantage in banana production. Country A since it has the absolute advantage in banana production. Country A since it has the comparative advantage in banana production. Country A since it has the comparative advantage in banana production. Country B since it has the absolute advantage in banana production. Country B since it has the absolute advantage in banana production. Country B since it has the comparative advantage in banana production.

Answer 1

To determine which country should produce bananas, we need to analyze both absolute and comparative advantages.

1. Absolute Advantage: This is when a country can produce more of a good with the same amount of resources than another country.

2. Comparative Advantage: This is determined by who has the lowest opportunity cost in producing a particular good.

Assuming the data from the table indicates that Country A can produce more bananas than Country B, then Country A has the absolute advantage in banana production. However, that's not sufficient alone to make the decision; we also need to consider comparative advantage.

• If Country A has a lower opportunity cost for producing bananas (i.e., it has to give up fewer apples to produce one more banana compared to Country B), then Country A should produce bananas.
• If Country B has a lower opportunity cost for producing bananas (i.e., it gives up fewer apples per banana compared to Country A), then Country B should produce bananas.

Without the actual numbers from the table, this analysis can’t conclude which country should produce bananas definitively. However, if you know the opportunity costs for each country, comparing those will directly lead you to the correct answer regarding which country should focus on producing bananas.

So, if the table shows that Country B has the lower opportunity cost for producing bananas, then the correct response would be:

Country B since it has the comparative advantage in banana production.

If you find out that Country A has the lower opportunity cost instead, then:

Country A since it has the comparative advantage in banana production.

Please refer to the specific values in your table to make the selection accordingly based on comparative advantage.