Multiple Choice
Suppose that the United States and Italy are considering trade in two products: grain and oranges. The United States can produce 800 million bushels of grain or 200 million bushels of oranges, while Italy can produce 200 million bushels of grain or 100 million bushels of oranges. Which statement regarding comparative advantage is true?
A) The United States has a comparative advantage in producing both grain and oranges.
B) Italy has a comparative advantage in producing both grain and oranges.
C) The United States has a comparative advantage in producing oranges only.
D) Italy has a comparative advantage in producing oranges only.
Correct Answer:
Verified
Correct Answer:
Verified
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