Question

If costa rica is able to produce 50,000 pounds of bananas a day, while nicaragua can produce 30,000 pounds of bananas a day, which statement must be true? question 5 options:

a) costa rica has both an absolute advantage and comparative advantage over nicaragua in banana production.
b) costa rica does not necessarily have an absolute advantage nor a comparative advantage over nicaragua in banana production.
c) costa rica has an absolute advantage over nicaragua in banana production.
d) costa rica has a comparative advantage over nicaragua in banana production.

Answer 1

The correct answer is option C. Costa Rica has an absolute advantage over Nicaragua in banana production.

Step-by-step explanation:

In this scenario, Costa Rica is able to produce 50,000 pounds of bananas a day, while Nicaragua can produce 30,000 pounds of bananas a day. To determine the country that has an absolute advantage in banana production, we look at which country can produce more of the good. In this case, Costa Rica can produce more bananas, so it has an absolute advantage over Nicaragua in banana production.

To determine the country that has a comparative advantage, we need to consider the opportunity cost. Since we do not have information about the opportunity cost, we cannot determine which country has a comparative advantage.

Therefore, the correct statement is option c) Costa Rica has an absolute advantage over Nicaragua in banana production.