Use the table to answer the question.
Apples Bananas
Country A 500 1500
Country B 800 1600
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 B since it has the comparative advantage in banana production.
Country B since it has the comparative advantage in banana production.
Country B since it has the absolute advantage in banana production.
1 answer
Country B should produce bananas because it has the comparative advantage in banana production. This means that Country B can produce bananas at a lower opportunity cost compared to Country A. By focusing on banana production, Country B can maximize its production and trade potential.
1 answer