Figure 22-7

-In Figure 22-7, AB represents the production possibilities of Pestoland and CD that of Pastaland.In this graph, Pestoland has a comparative advantage in

Question

Figure 22-7
 
-In Figure 22-7, AB represents the production possibilities of Pestoland and CD that of Pastaland.In this graph, Pestoland has a comparative advantage in

Quizplus · Accepted Answer

Comparative advantage is determined by the slope of the production possibility frontier (PPF). The PPF for Pestoland is less steep than the PPF for Pastaland, which means that Pestoland can produce more pasta than Pastaland for every unit of pesto foregone. This is reflected in the ratio OA/OB being smaller than the ratio OC/OD. Therefore, Pestoland has a comparative advantage in pasta production.

Figure 22-7 -In Figure 22-7, AB Represents the Production Possibilities of Pestoland