Suppose the world consists of two countries: Germany and Spain. Further, suppose there are only two goods, food and clothing. Which of the following statements is true?
A) If Germany has an absolute advantage in the production of food, then Spain must have an absolute advantage in the production of clothing.
B) None of these answers.
C) If Germany has a comparative advantage in the production of food, Spain might also have a comparative advantage in the production of food.
D) If Germany has a comparative advantage in the production of food, it must also have a comparative advantage in the production of clothing.
E) If Germany has a comparative advantage in the production of food, then Spain must have a comparative advantage in the production of clothing.
Correct Answer:
Verified
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