Suppose the Czech Republic and Slovakia can produce either wheat or cotton on an acre of land. If the Czech Republic (CR) produces 1.0 bale of cotton, the CR gives-up 1.33 bushels of wheat. If Slovakia (SK) produces 1.0 bale of cotton, SK gives-up 2.00 bushels of wheat. Which nation has a comparative advantage in cotton output, and which nation has comparative in wheat output?
A) CR has a comparative advantage in cotton output, and SK has a comparative advantage in wheat output.
B) SK has a comparative advantage in cotton output, and CR has a comparative advantage in wheat output.
C) Neither SK nor CR have a comparative advantage in the output or either crop.
D) SK has a comparative advantage in both cotton and wheat output.
E) CR has a comparative advantage in both cotton and wheat

Question

Quizplus · Accepted Answer

Comparative advantage is determined by lower opportunity cost. In this question, CR has a lower opportunity cost thant SK in cotton production, while SK has a lower opportunity cost in wheat production.

Suppose the Czech Republic and Slovakia Can Produce Either Wheat