Multiple Choice
The U.S. can produce pizza for $7.50 each and barrels of beer for $37.50 each, and Germany can produce pizza for €5 each and barrels of beer for €15 each (€ is the symbol for the euro, the currency Germany uses) . If the exchange rate is 1.50 $/€ then
A) the U.S. has a comparative advantage in the production of beer.
B) neither country has a comparative advantage in the production of beer.
C) the U.S. has a comparative advantage in the production of pizza.
D) the U.S. has a comparative advantage in the production of beer and pizza.
Correct Answer:
Verified
Correct Answer:
Verified
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