For each wristwatch Denmark produces, it gives up the opportunity to make 50 kilograms of cheese.Germany can produce one wristwatch for every 100 kilograms of cheese it produces.Which of the following describes the comparative advantage between the two countries?

Question

Quizplus · Accepted Answer

Denmark has the comparative advantage in wristwatches because it only needs to give up 50 kilograms of cheese to produce one, while Germany needs to give up 100 kilograms of cheese to produce one. This means that Denmark's opportunity cost of producing a wristwatch is lower than Germany's, making it more efficient in producing wristwatches. However, we cannot determine who has the comparative advantage in cheese based on the given information, therefore option D cannot be chosen. Options A and B are also incorrect, as they do not take into account the opportunity cost of production.

For Each Wristwatch Denmark Produces, It Gives Up the Opportunity