The domestic opportunity cost of producing 100 barrels of chemicals in Germany is one ton of steel.In France,the domestic opportunity cost of producing 100 barrels of chemicals is two tons of steel.In this case:
A) France has a comparative advantage in the production of chemicals.
B) Germany has a comparative advantage in the production of chemicals.
C) mutual gains from trade can be obtained if Germany imports chemicals from France and France imports steel from Germany.
D) mutual gains from trade can be obtained if Germany exports steel to France and France exports chemicals to Germany.
The opportunity cost of producing chemicals is 1/100 in Germany and 1/50 in France.The country with the comparative advantage,or lowest opportunity cost,is Germany.
Correct Answer:
Verified
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