According to the graph which of the following statements is true?

Question

Quizplus · Accepted Answer

According to the graph, Alpha has an absolute advantage in the production of both wheat and tractors. However, when comparing the opportunity cost of producing wheat and tractors, Alpha has a lower opportunity cost of producing tractors. Therefore, Alpha has a comparative advantage in the production of tractors and should produce tractors and import wheat. Epsilon also has an absolute advantage in the production of both goods, but when comparing opportunity costs, it has a lower opportunity cost of producing wheat. Therefore, Epsilon has a comparative advantage in the production of wheat and should produce wheat and import tractors. However, this is not one of the answer choices.

According to the Graph Which of the Following Statements Is