Question

Kenya can produce coffee with very good efficiency, and furniture with medium efficiency. Mozambique can produce furniture with very good efficiency, and coffee with medium efficiency. The theory of comparative advantage would instruct that: Select one: a. Kenya should produce coffee; Mozambique should produce furniture; and the two countries should trade for the item they don't have. b. Coffee will be relatively more expensive in Kenya and furniture will be relatively more expensive in Mozambique. c. Tanzania, right between Kenya and Mozambique, can probably produce both coffee and furniture with good, but not very good, efficiency. d. That both countries should really start to focus on more capital-intensive industries, like auto manufacturing.

Answer 1

a. Kenya should produce coffee; Mozambique should produce furniture; and the two countries should trade for the item they don't have

Step-by-step explanation:

A country has comparative advantage in production if it produces at a lower opportunity cost when compared with other countries.

The law of comparative advantage states that a country should produce goods for which it has comparative advantage in its production.

Becausd Kenya is highly efficient in coffee production, it should produce coffee. Mozambique should produce furniture because its highly efficient in furniture production.

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