Refer to the information provided in Table 18.1 below to answer the questions that follow.
Table 18.1
-Refer to Table 18.1. Guatemala has
A) a comparative advantage in orange production.
B) an absolute advantage in orange production.
C) an absolute advantage in banana production.
D) a comparative advantage in banana production.

Question

Refer to the information provided in Table 18.1 below to answer the questions that follow.
Table 18.1 
-Refer to Table 18.1. Guatemala has
A) a comparative advantage in orange production. 
B) an absolute advantage in orange production. 
C) an absolute advantage in banana production. 
D) a comparative advantage in banana production.

Quizplus · Accepted Answer

According to the table, Guatemala has a lower opportunity cost of producing bananas compared to oranges (1 banana = 0.5 oranges, whereas in Honduras 1 banana = 1 orange). Therefore, Guatemala has a comparative advantage in banana production over orange production. There is no information provided to determine absolute advantage.

Refer to the Information Provided in Table 18