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Figure: Comparative Advantage
Eastland and Westland produce only two goods, boxes of peaches and boxes of oranges, and this figure shows each nation's production possibility frontier for the two goods.
-(Figure: Comparative Advantage) Look at the figure Comparative Advantage. The opportunity cost of producing 1 box of peaches for Westland is _____ box(es) of oranges.
A)1
B)0.25
C)4
D)10

Question

Use the following to answer questions :
Figure: Comparative Advantage
Eastland and Westland produce only two goods, boxes of peaches and boxes of oranges, and this figure shows each nation's production possibility frontier for the two goods. 
-(Figure: Comparative Advantage) Look at the figure Comparative Advantage. The opportunity cost of producing 1 box of peaches for Westland is _____ box(es) of oranges.
A)1 
B)0.25 
C)4 
D)10

Quizplus · Accepted Answer

The opportunity cost of producing 1 box of peaches for Westland is 0.25 box(es) of oranges. Therefore, Westland has a comparative advantage in producing oranges and should specialize in producing that good. Eastland, on the other hand, has a comparative advantage in producing peaches and should specialize in producing that good. This will lead to mutually beneficial trade between the two nations.

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