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Figure: The Production Possibilities for Two Countries
-(Figure: The Production Possibilities for Two Countries) Look at the figure The Production Possibilities for Two Countries. Indonesia has a comparative advantage in producing _____, while Malaysia has a comparative advantage in producing _____.

Question

Use the following to answer questions:
Figure: The Production Possibilities for Two Countries 
-(Figure: The Production Possibilities for Two Countries) Look at the figure The Production Possibilities for Two Countries. Indonesia has a comparative advantage in producing _____, while Malaysia has a comparative advantage in producing _____.

Quizplus · Accepted Answer

Indonesia has a steeper slope in producing tires, indicating a lower opportunity cost for producing them. Therefore, Indonesia has a comparative advantage in producing tires. Similarly, Malaysia has a steeper slope in producing radios, indicating a lower opportunity cost for producing them. Therefore, Malaysia has a comparative advantage in producing radios.

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