If the United States' production possibility frontier was flatter to the widget axis,whereas Germany's was flatter to the butter axis,we know that
A) the United States has no comparative advantage
B) Germany has a comparative advantage in butter.
C) the U.S. has a comparative advantage in butter.
D) Germany has comparative advantages in both products.
E) the U.S. has a comparative disadvantage in widgets.

Question

Quizplus · Accepted Answer

A country has a comparative advantage in producing a good if it can produce it at a lower opportunity cost than another country. If Germany's production possibility frontier is flatter to the butter axis, it means Germany has a lower opportunity cost for producing butter, indicating a comparative advantage in butter.

If the United States' Production Possibility Frontier Was Flatter to the Widget