If 50 units of resources can produce either 1 ton of sugar beets or 100 lb.of ham in Germany,while 90 units of resources can produce either 2 tons of sugar beets or 300 lb.of ham in Poland,
A)Poland has a comparative advantage in producing both goods
B)Germany has a comparative advantage in producing sugar beets
C)neither country has an absolute advantage in producing sugar beets,but Poland has an absolute advantage in producing ham
D)Germany can produce more ham than Poland can
E)mutually beneficial international trade is not possible

Question

Quizplus · Accepted Answer

Comparative advantage refers to the ability of a country to produce a particular good or service at a lower opportunity cost than another country. In this case, Germany can produce 1 ton of sugar beets with 50 units of resources while it can produce only 100 lb. of ham with the same amount of resources. On the other hand, Poland can produce 2 tons of sugar beets or 300 lb. of ham with 90 units of resources. Therefore, Poland has an absolute advantage in producing both goods, but Germany has a comparative advantage in producing sugar beets because it can produce 1 ton of sugar beets with fewer resources compared to Poland. This situation provides the basis for mutually beneficial international trade as Germany can export sugar beets to Poland in exchange for ham.

If 50 Units of Resources Can Produce Either 1 Ton