One hour of labor in Mexico can produce 10 avocados or 20 bananas. One hour of labor in Canada can produce four avocados or 16 bananas. _____ has a comparative advantage in the production of avocados. _____ has a comparative advantage in the production of bananas.

Question

Quizplus · Accepted Answer

Mexico has a lower opportunity cost for producing one avocado (giving up the production of 2 bananas) compared to Canada (giving up the production of 4 bananas). Therefore, Mexico has a comparative advantage in the production of avocados. Canada has a lower opportunity cost for producing one banana (giving up the production of 0.25 avocados) compared to Mexico (giving up the production of 0.5 avocados). Therefore, Canada has a comparative advantage in the production of bananas.

One Hour of Labor in Mexico Can Produce 10 Avocados