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Once opportunity cost has been computed, the pattern of comparative advantage can be determined.

The pattern

of comparative advantage is who is the cheapest, measured by opportunity cost, producer of each good.

In this example, the person, Mo or Nina, that can produce rice with a lower opportunity cost has the comparative advantage in rice production.

The person, Mo or Nina, that can produce wheat with a lower opportunity cost has the comparative advantage in wheat production.

Lbs. Grown Per Acre Farm SizeRiceWheatMo100 acres126Nina50 acres2448

 

Opportunity Cost Rice WheatMo  Nina  

Group of answer choices



Mo has the comparative advantage in rice production.


Nina has the comparative advantage in rice production.


Mo has the comparative advantage in wheat production.


Nina has the comparative advantage in wheat production.


If Mo and Nina specialized in production according to comparative advantage, Mo would shift acreage out of rice and into wheat and Nina would shift acreage out of wheat into rice.


If Mo and Nina specialized in production according to comparative advantage, Nina would shift acreage out of rice and into wheat and Mo would shift acreage out of wheat into rice.


If Mo and Nina fully specialized in production according to comparative advantage, Nina would produce only rice and Mo would produce only wheat.


If Mo and Nina fully specialized in production according to comparative advantage, Mo would produce only rice and Nina would produce only wheat.


If Mo produced only rice and Nina produced only wheat, the total amount of wheat and rice produced by Mo and Nina together would increase.


If Mo produced only wheat and Nina produced only rice, the total amount of wheat and rice produced by Mo and Nina together would increase.


By specializing in production according to comparative advantage, Mo and Nina are able to create wealth, i.e. increase the amount of rice and wheat produced without requiring more productive resources or an improvement in technology.

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