Vintland and Moonited Republic produce wine and cheese. The opportunity cost for the production of a bottle of wine in Vintland is 2 pounds of cheese, and in the Moonited Republic is 2.5 pounds of cheese. Based on this information, it can be concluded that:

Question

Quizplus · Accepted Answer

Vintland has a lower opportunity cost for the production of wine than the Moonited Republic, meaning that Vintland has a comparative advantage in producing wine. This creates a potential for trade between the two countries, where Vintland can specialize in producing wine and the Moonited Republic can specialize in producing cheese, resulting in both countries being able to consume more of both goods. Option A is incorrect as trade is possible based on comparative advantage. Option C is incorrect as it is the opposite of the correct answer. Option D is incorrect as Vintland has a comparative advantage in the production of wine, not an absolute disadvantage in the production of both goods.

Vintland and Moonited Republic Produce Wine and Cheese