Country B can produce 10 yards of textiles and 6 pounds of food per unit of input.Country A can produce 8 yards of textiles and 5 pounds of food per unit of input.
A) Country A is relatively more efficient than Country B in the production of textiles
B) Country B is relatively more efficient than Country A in the production of food
C) Country A has an absolute advantage over Country B in the production of food and textiles
D) Country B has an absolute advantage over Country A in the production of food and textiles.

Question

Quizplus · Accepted Answer

Country B has an opportunity cost of 1 yard of textiles per 0.6 (= 6/10) pounds of food; Country A has an opportunity cost of 1 yard of textiles for 0.63 (= 5/8) pounds of food. Country B has an opportunity cost of 1 pound of food per 1.67 (= 10/6) yards of textiles; Country A has an opportunity cost of 1 pound of food for 1.60 (= 8/5) yards of textiles. Thus, Country B has an absolute advantage and a relative efficiency over Country A in the production of textiles. Country A has a relative efficiency over Country B in the production of food. Country A does not have an absolute advantage over Country B in the production of food or textiles.

Country B Can Produce 10 Yards of Textiles and 6