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Economics
Easy
Country A can produce 100 units of steel or 200 units of cloth per worker. Country B can produce 40 units of steel or 120 units of cloth per worker. Country B has a comparative advantage in:
A
Cloth production, because its opportunity cost of cloth (1/3 unit of steel) is lower than Country A's (1/2 unit of steel).
B
Steel production, because it uses fewer resources per unit of output.
C
Neither good, because Country A has absolute advantage in both.
D
Both goods, because its labor costs are lower.
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Tags
#comparative-advantage
#opportunity-cost
#trade-theory
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CFA Level I — Economics Practice Question | AcadiFi | AcadiFi