Consider two nations, country A and country B, that produce goods X and Y. The production possibility frontiers for the two nations are graphed with units of good Y measured vertically and units of good X measured horizontally. At the two nation-s current points along their frontiers, the slope of a tangent line is steeper for country A than for country B. We can conclude that:
A) country A has an absolute advantage in producing good X.
B) country B has an absolute advantage in producing good X.
C) country A has a comparative advantage in producing good X.
D) country B has a comparative advantage in producing good X.

Question

Quizplus · Accepted Answer

The steeper slope for country A's production possibility frontier (PPF) indicates that it has to give up more of good Y to produce an additional unit of good X compared to country B. This suggests that country B has a lower opportunity cost for producing good X, implying a comparative advantage in producing good X.

Consider Two Nations, Country a and Country B, That Produce