Question

Using the same amount of​ resources, suppose that Nicaragua can produce twice as much coffeecoffee as Colombia.​ Nevertheless, Colombia could still have the comparative advantage in producing coffeecoffee if A. it is even less efficient than Nicaragua in the production of goods other than coffeecoffee. B. it negotiates trade agreements that assign it the comparative advantage in coffeecoffee. C. its currency is more than double the value of​ Nicaragua's currency. D. its productivity in wheatwheat is twice the productivity Nicaragua possesses in wheatwheat.

Answer 1

A. it is even less efficient than Nicaragua in the production of goods other than coffeecoffee.

Step-by-step explanation:

The comparative advantage for any product is related to the opportunity cost of that product.

Comparative advantage, an economic term which refers to the ability in producing goods at a lower opportunity cost when compared to their trade partners. Having a comparative advantage gives an organization the ability to sell services and goods giving a lower price than the competitors and also realize the stronger sales margins.

In the context, Columbia have a comparative advantage over Nicaragua in case of coffee production because even it is less efficient in producing other goods as compared to Nicaragua because Columbia is famous for coffee production and is the second largest producer of coffee in the world after Brazil.

Hence the correct option is (A).