Suppose that the United States and Italy are considering trade in two products: grain and oranges.Suppose that before trade,the United States produces 800 million bushels of grain and 200 million bushels of oranges.At the same time,Italy produces 200 million bushels of grain and 100 million bushels of oranges.Which of the following statements regarding comparative advantage is TRUE?
A) The United States has a comparative advantage in producing both grain and oranges.
B) Italy has a comparative advantage in producing both grain and oranges.
C) The United States has a comparative advantage in producing oranges only.
D) Italy has a comparative advantage in producing oranges only.
Correct Answer:
Verified
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