Sam met Rachel in class. They sometimes see each other in the dining hall or around campus and say hello to each other, but they
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A. good A; good B
B. both goods; neither good
C. good B; good A
D. neither good; both goods
E. neither good; neither good
Answer:
A. good A; good B
Explanation:
The comparative advantage refers to the ability a country has to produce a good or service with a lower opportunity cost which is the benefit lost when deciding to produce one product over another. According to the table, we can see that Country 1 has a comparative advantage in the production of good A because it has a lower opportunity cost and Country 2 has a comparative advantage in the production of good B because of the lower opportunity cost.
