Question

If resources and goods are free to move across states, and if Florida producers choose to specialize in growing grapefruit and Georgia producers choose to specialize in growing peaches, then we could reasonably conclude that

a. Georgia has a comparative advantage in growing peaches
b. Florida has a comparative advantage in growing peaches
c. the opportunity cost of growing peaches is lower in Georgia than in Florida
d. The opportunity cost of growing grapefruit is lower in Florida than Georgia
e. A, C, and D are true
f. All of the above are true

Answer 1

The correct answer is a. Georgia has a comparative advantage in growing peaches.

Step-by-step explanation:

The correct answer is a. Georgia has a comparative advantage in growing peaches.

Comparative advantage is the ability of a country, state, or individual to produce a good or service at a lower opportunity cost than another. In this scenario, if resources and goods can move freely across states and Florida specializes in growing grapefruit while Georgia specializes in growing peaches, it implies that Georgia can produce peaches at a lower opportunity cost compared to Florida.

Opportunity cost refers to the value of the next-best alternative that is given up when making a choice. Since Georgia producers choose to specialize in growing peaches instead of grapefruit, the opportunity cost of growing peaches must be lower in Georgia than in Florida.