Assume that Nation A's production possibilities are either 30 units of bricks or 50 units of wheat. Nation B's production possibilities are 20 units of bricks and 40 units of wheat. Which of the following is true? rev: 06_20_2018 Multiple Choice Nation A is the least-cost producer of wheat. The high-cost producer of bricks is Nation A. The opportunity cost of wheat production is lower in Nation B. According to the principle of comparative advantage, Nation B should specialize in the production of bricks.

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ewomazinoade ewomazinoade · Answer 1 · 2020-04-11T03:31:30+02:00

Answer:

The opportunity cost of wheat production is lower in Nation B.

Explanation:

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

For country A,

the opportunity cost of producing wheat = 30 / 50 = 0.6

The opportunity cost of producing brick = 50 / 30 = 1.7

For country B,

the opportunity cost of producing wheat = 20 / 40 = 0.5

The opportunity cost of producing brick = 40 / 20 = 2

The least cost producer of wheat is country B

The high cost producer of brick is country B

The opportunity cost of producing wheat is lower in country B when compared to country A.

According to the law of comparative advantage, country A should specialise in the production of bricks because it has the lower opportunity cost.

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