-Refer to Exhibit 34-9.Which of the following statements is true?
A) Country X has a comparative advantage in the production of good A.
B) Country Y has a comparative advantage in the production of good B.
C) It would be better for country A to specialize in (the production of)and trade good A than to specialize in and trade good B.
D) a and c
E) a,b,and c

Question

-Refer to Exhibit 34-9.Which of the following statements is true?
A) Country X has a comparative advantage in the production of good A. 
B) Country Y has a comparative advantage in the production of good B. 
C) It would be better for country A to specialize in (the production of)and trade good A than to specialize in and trade good B. 
D) a and c 
E) a,b,and c

Quizplus · Accepted Answer

Comparative advantage is determined by which country can produce a good at a lower opportunity cost. Without specific data from Exhibit 34-9, the correct answer cannot be directly verified. However, the principles of comparative advantage suggest that if one country has a comparative advantage in one good, it benefits from specializing in that good and trading for others. Thus, if Country X has a comparative advantage in good A (A), and it's better for a country (presumably Country X, given the typo in option C) to specialize in and trade good A than good B (C), it implies a recognition of comparative advantage principles. Additionally, if both statements about comparative advantages (A and B) are considered true, it implies that each country has a comparative advantage in different goods, which aligns with the theory of comparative advantage promoting mutual benefits from trade (E).