ECON 2010 Chapter Notes - Chapter 3: Absolute Advantage, Comparative Advantage, Opportunity Cost
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(Table: Production Possibilities for the U.S. and Great Britain) The table shows production possibilities for the United States and Great Britain, assuming that both countries could choose to devote all resources to producing either good. Which statement is correct with regard to the information in the table? |
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a. The U.S. has a comparative advantage in producing music CDs because it can produce more music CDs than anything else. b. These countries should not engage in trade with one another, because the transportation costs of these goods are too high. c. To determine which country has a comparative advantage in either good, we would need to know the monetary measure of production costs for both countries. d.Ā The U.S. has a comparative advantage in producing athletic shoes because it can do so at a lower opportunity cost. |
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