(Table: Production in the United States and Germany)According to the table, which of the following statements istrue?

Question

Quizplus · Accepted Answer

To determine comparative advantage, we need to look at the opportunity cost of producing each good in each country. In the United States, producing one clock costs 2 sofas in foregone production, while in Germany it only costs 1 sofa. This means that Germany has a comparative advantage in producing clocks. On the other hand, producing one sofa in the United States costs only 0.5 clocks in foregone production, while in Germany it costs 1 clock. This means that the United States has a comparative advantage in producing sofas. Therefore, statement C is true. Statement A is false because Germany has the comparative advantage in clocks. Statement B is false because we cannot determine absolute advantage from this table. Statement D is false because the United States only has a comparative advantage in sofas, not both sofas and clocks.

(Table: Production in the United States and Germany)According to the Table