If the U.S. can produce pizza for $5 each and barrels of beer for $25 each, and Germany can produce pizza for $7 each and barrels of beer for $21 each, then the U.S.

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The U.S. has a comparative advantage in the production of pizza because it can produce it at a lower opportunity cost compared to Germany. Specifically, the U.S. can produce one pizza for only 5/25 = 0.2 barrels of beer, while Germany needs to give up 7/21 = 0.33 barrels of beer to produce one pizza. Therefore, the U.S. should specialize in pizza production and trade with Germany, which should specialize in beer production. This would allow both countries to take advantage of their comparative advantages and increase overall global efficiency. There is no evidence to suggest that the U.S. has an absolute advantage in beer production, nor does it have a comparative advantage in both beer and pizza production.

If the US Can Produce Pizza for $5 Each and Barrels of Barrels