Solved

Karl Can Produce Either 10 Tons of Oranges or 5

Question 33

Multiple Choice

Karl can produce either 10 tons of oranges or 5 tons of apples in a year, while Adam can produce either 5 tons of oranges or 10 tons of apples. If there are only two goods in the world-apples and oranges-and the exchange rate between apples and oranges in international markets is 1 ton of apples per 3 tons of oranges, which of the following is likely to be true?


A) Karl and Adam will not trade apples and oranges with one another, since both will specialize in and export oranges to other countries.
B) Karl and Adam will not trade apples and oranges with one another, since both will specialize in and export apples to other countries.
C) Karl has a comparative advantage in oranges and will specialize in only oranges.
D) Adam has a comparative advantage in oranges and will specialize in only oranges.
E) Karl has an absolute advantage in apples and will specialize in only apples.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents