QCAA Economics Practice Questions - QCAA Economics External Assessment (Queensland) Exam

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Country A can produce either 40 units of Wheat or 20 units of Cloth per hour. Country B can produce either 30 units of Wheat or 15 units of Cloth per hour. Which statement correctly identifies their opportunity costs?

Country A has a lower opportunity cost of producing Wheat than Country B. Both countries have the exact same opportunity cost of producing Cloth (2 units of Wheat). Country B has a lower opportunity cost of producing Cloth than Country A. Country A has a comparative advantage in Cloth and Country B has a comparative advantage in Wheat.

Correct Answer:

Both countries have the exact same opportunity cost of producing Cloth (2 units of Wheat).

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