Figure 9-2

-Refer to Figure 9-2.What is China's position regarding pencil sharpeners in the world market
A)It has a comparative advantage in pencil sharpeners.
B)It cannot be competitive in the world market.
C)It would be better off if the world price for pencil sharpeners and its pre-trade price were equal.
D)It has an absolute advantage in pencil sharpeners.

Question

Figure 9-2
 
-Refer to Figure 9-2.What is China's position regarding pencil sharpeners in the world market
A)It has a comparative advantage in pencil sharpeners. 
B)It cannot be competitive in the world market. 
C)It would be better off if the world price for pencil sharpeners and its pre-trade price were equal. 
D)It has an absolute advantage in pencil sharpeners.

Quizplus · Accepted Answer

Based on the graph, China's pre-trade price for pencil sharpeners is lower than the world price, indicating that it has a comparative advantage in producing pencil sharpeners. This means that it can produce pencil sharpeners at a lower opportunity cost compared to other countries and can therefore compete in the world market.

Figure 9-2 -Refer to Figure 9-2.What Is China's Position Regarding Pencil Sharpeners