If the cost of producing wool in New Zealand is higher than in China but New Zealand exports wool to China, it is likely that:
A)New Zealand has a comparative advantage in producing cameras and China has a comparative advantage in producing wool.
B)New Zealand has an absolute advantage in producing wool and China has a comparative advantage in producing cameras.
C)New Zealand and China would both be better off if they each produced wool and cameras.
D)New Zealand subsidises the production of wool.

Question

Quizplus · Accepted Answer

New Zealand exporting wool to China despite higher production costs suggests that there might be factors like subsidies making wool exports economically viable. Comparative and absolute advantages (options A, B, and C) are not directly indicated by the scenario described.

If the Cost of Producing Wool in New Zealand Is