Figure 2-7

Figure 2-7 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts.
-Refer to Figure 2-7.Which country has a comparative advantage in the production of coconuts?

Question

Figure 2-7
  
Figure 2-7 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts.
-Refer to Figure 2-7.Which country has a comparative advantage in the production of coconuts?

Quizplus · Accepted Answer

Guatemala has a lower opportunity cost of producing coconuts compared to pineapples, as evidenced by a flatter slope of its production possibility frontier for coconuts. This indicates a comparative advantage in coconuts. Costa Rica has a steeper slope for coconuts, indicating a higher opportunity cost of producing them, suggesting a comparative advantage in pineapples.

Figure 2-7 Figure 2-7 Shows the Production Possibilities Frontiers for Costa Rica