The following table summarizes the production relationships in Mexico and Guatemala to produce tomatoes and beer:Table 16.1
Hours of Labor Required to Produce

-Refer to Table 16.1. Which of the following statements is TRUE?
A) Guatemala has an absolute advantage in producing tomatoes.
B) Guatemala has an absolute advantage in producing beer.
C) Guatemala has a comparative advantage in producing beer.
D) Guatemala has a comparative advantage in producing tomatoes.
E) all of the above

Question

The following table summarizes the production relationships in Mexico and Guatemala to produce tomatoes and beer:Table 16.1
Hours of Labor Required to Produce
 
-Refer to Table 16.1. Which of the following statements is TRUE?
A) Guatemala has an absolute advantage in producing tomatoes. 
B) Guatemala has an absolute advantage in producing beer. 
C) Guatemala has a comparative advantage in producing beer. 
D) Guatemala has a comparative advantage in producing tomatoes. 
E) all of the above

Quizplus · Accepted Answer

Guatemala has a comparative advantage in producing beer if it can produce beer at a lower opportunity cost than other countries, even if it doesn't have an absolute advantage.

The Following Table Summarizes the Production Relationships in Mexico and Guatemala