Figure 3-8
Belgium's Production Possibilities Frontier Latvia's Production Possibilities Frontier
-Refer to Figure 3-8.Belgium has a comparative advantage in the production of

Question

Figure 3-8
Belgium's Production Possibilities Frontier Latvia's Production Possibilities Frontier  
-Refer to Figure 3-8.Belgium has a comparative advantage in the production of

Quizplus · Accepted Answer

Comparative advantage refers to a country's ability to produce a good or service at a lower opportunity cost than another country. In Figure 3-8, we can see that Belgium has a steeper production possibilities frontier (PPF) for waffles, indicating that it has a higher opportunity cost for producing waffles compared to Latvia. On the other hand, Latvia has a steeper PPF for pancakes, indicating that it has a higher opportunity cost for producing pancakes compared to Belgium.

Therefore, Belgium has a comparative advantage in producing pancakes, as it has a lower opportunity cost for producing it compared to Latvia. Similarly, Latvia has a comparative advantage in producing waffles, as it has a lower opportunity cost for producing it compared to Belgium. Thus, the correct answer is B - pancakes and Latvia has a comparative advantage in the production of waffles.

Figure 3-8 Belgium's Production Possibilities Frontier Latvia's Production Possibilities Frontier