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Use the production possibilities frontiers in Exhibit to answer. Assume each country has the same number of workers, say 20 million, and that each axis is measured in metric tons per month.

Argentina has a comparative advantage in the production of
a. both fruit and beef.
b. fruit.
c. beef.
d. neither fruit nor beef.

1 answer

To determine which country has a comparative advantage in the production of fruit or beef, we need to analyze the opportunity costs associated with producing each good in Argentina and compare them to those of another country (which isn't provided but is typically part of the context in such a question).

  1. Comparative Advantage: A country has a comparative advantage in the production of a good if it can produce that good at a lower opportunity cost than another country. This means that the country sacrifices less of other goods when producing this good.

  2. Production Possibilities Frontier (PPF): The PPF illustrates the trade-offs between two goods (in this case, fruit and beef). The slope of the PPF indicates the opportunity cost of one good in terms of the other.

Without the specific numbers or a graphic to analyze the PPF, we cannot give a definitive answer to the question. However, typical reasoning suggests you would look at the slope of the PPF for Argentina to determine its opportunity costs:

  • If Argentina sacrifices a relatively lower amount of beef to produce fruit than another country does, then it has a comparative advantage in fruit.
  • Conversely, if Argentina sacrifices a lower amount of fruit to produce beef than the other country, then it has a comparative advantage in beef.

So, based on this reasoning and without specific data from the PPF,

  • If the opportunity cost of producing fruit in terms of beef is smaller than in the other country, the answer is (b) fruit.
  • If the opportunity cost of producing beef in terms of fruit is smaller, then the answer is (c) beef.
  • If the costs are the same or higher compared to the other country for both goods, the answer is (d) neither fruit nor beef.

In summary, without additional context or details from the production possibilities frontiers in your exhibit, the correct answer cannot be determined definitively. You would need to assess the opportunity costs for each product in Argentina relative to the other country to conclude which option is correct.