France and england both produce wine and cloth with constant opportunity costs. france can produce 150 barrels of wine if it produces no cloth or 100 bolts of cloth if it produces no wine. england can produce 50 barrels of wine if it produces no cloth or 100 bolts of cloth if it produces no wine. using this information, we can conclude that:

Question

Business

Anne

13 April, 14:41

France and england both produce wine and cloth with constant opportunity costs. france can produce 150 barrels of wine if it produces no cloth or 100 bolts of cloth if it produces no wine. england can produce 50 barrels of wine if it produces no cloth or 100 bolts of cloth if it produces no wine. using this information, we can conclude that:

+4

Answers (1)

Know the Answer?

Amelie Luna · Answer 1

The question focuses on which country has comparative advantage in what production. A country would have comparative advantage in producing a good or service if it has lower opportunity cost of production.

As France produces 100 bolts of cloth, it gives up 150 barrels of wine. Hence, the opportunity cost of a bolt of cloth is 1.5 barrels of wine.

As England produces 100 bolts of cloth, it gives up 50 barrels of wine. Hence, the opportunity cost of a bolt of cloth is 0.5 barrels of wine.

As the opportunity cost of a bolt of cloth is lower for England, England has comparative advantage in cloth production. Reversely, France would have comparative advantage in wine production.