Country A can produce 1 cello by giving up the production of 5 guitars. Country B can produce 1 guitar by giving up the production of 4 cellos. In which good does country A have a comparative advantage?
A) guitars
B) cellos
C) both goods
D) neither good

Question

Quizplus · Accepted Answer

Country A has a comparative advantage in guitars because it has a lower opportunity cost (1/5 of a cello per guitar) compared to Country B's opportunity cost for producing guitars (4 cellos per guitar).

Country a Can Produce 1 Cello by Giving Up the Production