Question 18 1 pts Figure 3-5 Hosne\'s Production Possibilities Frontier Merve\'s

Question

Question 18 1 pts Figure 3-5 Hosne's Production Possibilities Frontier Merve's Production Possibilities Frontier tvalles 10 t wallets 10 1 2 3 45 678 9 10 1 2 3 45 678 9 10 Refer to Figure 3-5. Hosne has a comparative advantage in the production of O purses and Merve has a comparative advantage in the production of wallets. wallets and Merve has a comparative advantage in the production of purses. both goods and Merve has a comparative advantage in the production of neither good. neither good and Merve has a comparative advantage in the production of both goods. O

Explanation / Answer

Hosne has a comparative advantage in the production of "Purses and Merve has a comparative advantage in the production of wallets".

To understand it better look at at the absolute disadvantage. a nation having a lesser absolute disadvantage in the production of goods have a comparative advantage in the production of that good. Here, Wallet (8 -6 = 2) and Purse (10 - 4= 6) 2 is lesser for Merve so they have a comparative advantage in the production of Wallet.

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