If all we know is that the opportunity cost of a car equals 100 refrigerators in France,and 200 refrigerators in Italy,we can conclude
A)nothing about which nation has the absolute advantage in refrigerator production
B)that France has a comparative advantage in refrigerator production
C)that mutually beneficial international trade might involve the market exchange of 1 car for 80 refrigerators (whereby France would gain more than Italy)
D)that mutually beneficial international trade might involve the market exchange of 1 car for 300 refrigerators (whereby Italy would gain more than France)
E)that France has the absolute advantage in car production

Question

Quizplus · Accepted Answer

Opportunity cost information alone does not provide enough information to determine absolute advantage, which is based on overall productivity, not opportunity cost.

If All We Know Is That the Opportunity Cost of a Car