-Refer to the above table. Assuming that opportunity costs are constant, which of the following is a correct statement?
A)The United States has a comparative advantage in computers.
B)The United States has a comparative advantage in bicycles.
C)Mexico has a comparative advantage in computers.
D)Mexico has a comparative advantage in both goods.

Question

-Refer to the above table. Assuming that opportunity costs are constant, which of the following is a correct statement?
A)The United States has a comparative advantage in computers. 
B)The United States has a comparative advantage in bicycles. 
C)Mexico has a comparative advantage in computers. 
D)Mexico has a comparative advantage in both goods.

Quizplus · Accepted Answer

The United States has a comparative advantage in computers if it can produce them at a lower opportunity cost than Mexico. Since opportunity costs are constant, we compare the opportunity cost of producing computers in both countries. If the U.S. has a lower opportunity cost for computers, it has a comparative advantage in that good.

-Refer to the Above Table