Suppose that Costa Rica is able to produce 50,000 pounds of coffee or 10,000 medical devices per day; Vietnam is able to produce 40,000 pounds of coffee or 5,000 medical devices per day. Which statement is TRUE?

Question

Quizplus · Accepted Answer

Costa Rica can produce more coffee and medical devices than Vietnam per day, so Costa Rica has an absolute advantage in the production of both coffee and medical devices. However, Costa Rica has a higher opportunity cost of producing medical devices (50,000 pounds of coffee / 10,000 medical devices = 5 pounds of coffee per medical device) than Vietnam (40,000 pounds of coffee / 5,000 medical devices = 8 pounds of coffee per medical device). This means that Costa Rica has a comparative advantage in the production of coffee, while Vietnam has a comparative advantage in the production of medical devices.

Suppose That Costa Rica Is Able to Produce 50,000 Pounds