Question

In a hypothetical situation, the United States and Mexico have labor forces of the same size. The production possibilities curves in the figure show that the United States has an absolute advantage over Mexico in vegetables and beef. This means that if both countries use the same amount of resources on those products, ______.

A. the United States can produce both products at a lower opportunity cost
B. Mexico can produce both products at a lower opportunity cost
C. Mexico can produce more of both goods before specialization
D. the United States can produce more of both goods

Answer 1

In a hypothetical situation, if both the United States and Mexico use the same amount of resources on vegetables and beef, the United States can produce both products at a lower opportunity cost.

Step-by-step explanation:

In this hypothetical situation, if both the United States and Mexico use the same amount of resources on vegetables and beef, the United States can produce both products at a lower opportunity cost.

This is because the United States has an absolute advantage over Mexico in both vegetables and beef. Absolute advantage means that the United States can produce a given quantity of a product using fewer resources (in this case, labor) compared to Mexico.

As a result, the United States can produce more of both goods compared to Mexico when using the same amount of resources.