The following question(s) relate(s) to the material in the addendum to Chapter 2. Use the production possibilities data for Lebos and Slavia below to answer the question(s).
Table 2-4

Refer to Table 2-4. Which of the following is correct?
A) Lebos has the comparative advantage in both goods.
B) Slavia has the comparative advantage in food.
C) Lebos has the comparative advantage in food.
D) Lebos has the comparative advantage in clothing.

Question

The following question(s) relate(s) to the material in the addendum to Chapter 2. Use the production possibilities data for Lebos and Slavia below to answer the question(s).
Table 2-4

Refer to Table 2-4. Which of the following is correct?
A) Lebos has the comparative advantage in both goods. 
B) Slavia has the comparative advantage in food. 
C) Lebos has the comparative advantage in food. 
D) Lebos has the comparative advantage in clothing.

Quizplus · Accepted Answer

According to the production possibilities data, Lebos can produce either 20 units of food or 10 units of clothing, while Slavia can produce either 15 units of food or 5 units of clothing. Lebos has a lower opportunity cost of producing food than Slavia does, as Lebos only gives up 1 unit of clothing for each additional 2 units of food produced, whereas Slavia gives up 1 unit of clothing for each additional 3 units of food produced. Therefore, Lebos has the comparative advantage in producing food.

The Following Question(s) Relate(s) to the Material in the Addendum