Question

In a two-country, two-product world, the statement "Germany enjoys a comparative advantage over France in autos relative to ships" is equivalent to:
A. France having a comparative disadvantage compared to Germany in autos and ships.
B. Germany having a comparative advantage over France in autos and ships.
C. France having no comparative advantage over Germany.
D. France should produce autos. France having a comparative advantage over Germany in ships.

Answer 1

Answer:

France having a comparative advantage over Germany in ships.

Explanation:

Comparative advantage is defined as the ability of a country to produce goods and services at a lower opportunity cost compared to other countries that produce a particular good. For example of country A produces cars at $300 cost, whole country B produces the Se car at cost of $1000 the country A has comparative advantage and should focus on producing cars.

In the scenario given Germany enjoys a comparative advantage over France in autos relative to ships.

This implies that France has a greater comparative advantage in ship production than Germany.

Answer 2

Answer:

France having a comparative advantage over Germany in ships

Explanation:

Comparative advantage simply means someone or an organization having an advantage over another in the production of a particular good or service because he can produce the goods or service at a lower cost than another person producing the same goods or service.

Germany enjoying a comparative advantage over France in the production of autos relative to the production of ships simply means that France will have a comparative advantage over Germany in the production of ships. it would be a good business decision for Germany to go into the production of Autos and France going into the production of ships.