Table 14-3
Karl can produce either 10 tonnes of oranges or 5 tonnes of apples in a year, while Adam can produce either 5 tonnes of oranges or 10 tonnes of apples.
-Refer to Table 14-3.Which of the following statements about trade is the most accurate?

Question

Quizplus · Accepted Answer

Karl can produce 10 tonnes of oranges, which is more than Adam's maximum production of 5 tonnes. Therefore, Karl has an absolute advantage in oranges. In addition, Karl's opportunity cost of producing 1 tonne of apples is only 2 tonnes of oranges, while Adam's opportunity cost of producing 1 tonne of apples is 0.5 tonnes of oranges. This means that Karl has a lower opportunity cost in producing apples, giving him a comparative advantage in oranges as well.

Table 14-3 Karl Can Produce Either 10 Tonnes of Oranges or 5