Question

Canada and the U.S. both produce wheat and computer software. Canada is said to have the comparative advantage in producing wheat if: a. Canada requires fewer resources than the U.S. to produce a bushel of wheat. b. the opportunity cost of producing a bushel of wheat is lower for Canada than it is for the U.S. c. the opportunity cost of producing a bushel of wheat is lower for the U.S. than it is for Canada. d. the U.S. has an absolute advantage over Canada in producing computer software

Answer 1

Answer:

The answer is B.

Explanation:

In terms of economics, there is "Absolute Advantage" and "Comparative Advantage".

Absolute Advantage is used when someone is the best at a certain task than someone else, they have the absolute advantage.

Comparative Advantage does not work quite the same, you don't have to be the best at something, if you can produce the same product or results at a lower cost, you have comparative advantage.

And in the option B, it says that Canada is said to have comparative advantage if the opportunity cost is lower for Canada than it is for the US. Opportunity cost is the amount that it costs for someone to produce something and if you have lower opportunity cost, you can have the comparative advantage without having a higher production rate.

I hope this answer helps.