The data embodied in the above diagrams suggest that:
A) Italy should export X and Greece should export Y.
B) Greece should export X and Italy should export Y.
C) Production in both countries is subject to increasing costs.
D) Italy should import both X and Y from Greece.
Italy has a comparative advantage in the production of product X because of its lower opportunity cost (1 vs.2) ,while Greece has a comparative advantage in the production of product Y because of its lower opportunity cost (½ vs.2) .Therefore,Italy should export product X and Greece should export product Y.
Correct Answer:
Verified
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