Principles Of Microeconomics Practice Test 2026 | Exam Prep Questions And Answers

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Country A can produce a unit of cloth by giving up 2 units of wine, while Country B gives up 4 units of wine per unit of cloth. Based on comparative advantage, which country should specialize in cloth?

Country A, because its opportunity cost of cloth is lower Country B, because its opportunity cost of cloth is higher Neither, because both have the same absolute advantage Both should produce only cloth to maximize world output

Correct Answer:

Country A, because its opportunity cost of cloth is lower

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