Question

France and England both produce cheese and cloth under conditions of constant opportunity costs. France will have a comparative advantage in cheese production if: A. it can produce more cheese than England. B. its labor productivity in cheese production is greater than England's. C. the absolute cost of producing cheese is lower in France than in England. D. the opportunity cost of cheese production is lower in France than in England. E. it can produce more cloth than England.

Answer 1

D

Step-by-step explanation:

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

For example, England produces 10 yards of clothes and 5 kg of cheese. France produces 5 yards of clothes and 10 kg of cheese.

for England,

opportunity cost of producing clothes = 5/10 = 0.5

opportunity cost of producing cheese = 10/5 = 2

for France,

opportunity cost of producing cheese = 5/10 = 0.5

opportunity cost of producing clothes = 10/5 = 2

England has a comparative advantage in the production of clothes and France has a comparative advantage in the production of cheese