Suppose California and Wisconsin produce wine and cheese.Making a bottle of wine costs $3 in California,but $12 in Wisconsin.On the other hand,making a pound of cheese costs $4 in California,and $8 in Wisconsin.Under these conditions,

Question

Quizplus · Accepted Answer

California has a comparative advantage in producing wine, as it has a lower cost of production ($3) compared to Wisconsin ($12). Wisconsin, on the other hand, has a comparative advantage in producing cheese, as it has a lower cost of production ($8) compared to California ($4). Therefore, it would be beneficial for California to export wine and for Wisconsin to export cheese, as they can both benefit from trade by specializing in their respective areas of comparative advantage.

Suppose California and Wisconsin Produce Wine and Cheese