Nation Statum can produce either 800 units of chemicals or 1600 units of clothing.Nation Timin can produce either 200 units of chemicals or 800 units of clothing.
A) Nation Statum has a comparative advantage in producing clothing.
B) Nation Timin has a comparative advantage in producing chemicals.
C) Nation Statum has a comparative advantage in producing chemicals.
D) Nation Timin is the high-cost producer of clothing.
Statum has the comparative advantage in producing chemicals because its opportunity cost is 2,while the opportunity cost in Timin is 4.The country with the lower opportunity cost has the comparative advantage.
Correct Answer:
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