Answer: a. good A; good B
Step-by-step explanation:
Hello.
Your question seems to be lacking a fundamental piece of the puzzle.
Lemme add that for you.
Right then.
We need to know the opportunity costs in Country A and B for the 2 goods.
Country A
In Country A, if we produce none of Good B we are able to make 250 units of good A
If we product none of group A though, we can make 50 units of group B.
The opportunity cost of making A is,
= Production of B/ Production of A
= 50/250
= 0.2 B
For every Good A we produce we forego 0.2 of B
And for every Good B we produce we forego 250/50 = 5 units of A
Country B
In Country B, if we produce none of Good B we are able to make 75 units of good A
If we product none of group A though, we can make 75 units of group B.
The opportunity cost of making A is,
= Production of B/ Production of A
= 75/75
= 1 B
For every Good A we produce we forego 1 of B
And for every Good B we produce we forego 75/75 = 1 unit of A
This shows that Country 1 has a comparative Advantage in producing Good A because the Opportunity Cost is less. While Country B has a comparative Advantage in producing Good B because the opportunity cost is less as well.
So option A is correct.