Asked by Juleny Degollado on May 21, 2024
Verified
If the opportunity cost of producing one basketball in Romania is 3 Barbie dolls,while the opportunity cost of producing one basketball in Nigeria is 2 Barbie dolls,_______ has the comparative advantage in the production of basketballs.
A) Romania
B) Nigeria
C) both Romania and Nigeria
D) neither Romania nor Nigeria
Opportunity Cost
The cost of forgoing the next best alternative when making a decision or choosing between options.
Comparative Advantage
The ability of an individual, firm, or country to produce a certain good or service at a lower opportunity cost than others.
- Analyze the concepts of absolute and comparative advantage in international trade.
- Understand the concept of opportunity cost in the context of international trade.
Verified Answer
BN
Breanna NicolleMay 22, 2024
Final Answer :
B
Explanation :
Nigeria has a lower opportunity cost of producing one basketball, as it only costs 2 Barbie dolls compared to Romania's 3. This means that Nigeria has a comparative advantage in the production of basketballs. Romania may have a comparative advantage in the production of Barbie dolls, as they have a lower opportunity cost of producing them (1 basketball for 3 Barbie dolls compared to Nigeria's 1 basketball for 2 Barbie dolls). However, the question specifically asks about the production of basketballs, so the answer is B)Nigeria.
Learning Objectives
- Analyze the concepts of absolute and comparative advantage in international trade.
- Understand the concept of opportunity cost in the context of international trade.
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