Figure 2-14 Figure 2-14 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts.
-Refer to Figure 2-14. Which country has a comparative advantage in the production of coconuts?

Question

Figure 2-14  Figure 2-14 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts.
-Refer to Figure 2-14. 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 shown by its steeper production possibilities frontier for coconuts. This indicates a comparative advantage in the production of coconuts. Conversely, Costa Rica has a lower opportunity cost of producing pineapples compared to coconuts, hence a comparative advantage in pineapple production.

Figure 2-14 Figure 2-14 Shows the Production Possibilities Frontiers