(Figure: Gadgets and Widgets) The graph shows the production possibilities for two countries, A and B. Which statement is correct?

Question

Quizplus · Accepted Answer

Country B has a higher production possibility for widgets than country A, which means it has an absolute advantage in widgets. However, in terms of opportunity cost, country B has a lower opportunity cost for producing gadgets than country A. Therefore, country B has the comparative advantage in gadgets. With trade, country A can specialize in producing gadgets and country B can specialize in producing widgets, resulting in gains from trade.

(Figure: Gadgets and Widgets) the Graph Shows the Production Possibilities