-Two countries, Blue Violet and Orange Rose, produce only two goods: teapots and coffeepots. The table above gives their production possibilities. _______ has a comparative advantage in teapots and _______ has a comparative advantage in coffeepots.

Question

Quizplus · Accepted Answer

Comparative advantage is determined by which country can produce a good at a lower opportunity cost. Without specific numbers from the table, the general principle is that if Blue Violet can produce teapots with less sacrifice of coffeepots compared to Orange Rose, it has a comparative advantage in teapots. Conversely, if Orange Rose can produce coffeepots with less sacrifice of teapots compared to Blue Violet, it has a comparative advantage in coffeepots.

-Two Countries, Blue Violet and Orange Rose, Produce Only Two