Question

which situation is an example of comparative advantage in an international market?

country a decides to grow extra potatoes so they have more to export, while country b does not grow potatoes to export.

factories in country a and country b produce the same number of tablet computers. country a’s factories could be used instead to build more laptops than the factories in country b.

country a invests in a new technology while country b chooses to invest in education.

country a can produce 100 units of rice per acre of farmland, while country b can only produce 70 units of rice per acre of farmland using the same resources.

Explanation:

To determine the example of comparative advantage, we recall that comparative advantage is about the opportunity cost of producing a good. Let's analyze each option:

1. First option: Country A growing extra potatoes and Country B not growing potatoes for export doesn't relate to opportunity cost or relative efficiency. It's more about absolute production choice, not comparative advantage.

1. Second option: Factories in Country A and B produce the same number of tablet computers, but Country A's factories could be used to build more laptops than Country B's. This shows that Country A has a lower opportunity cost (in terms of laptops forgone) when producing tablets, or vice versa, which is the essence of comparative advantage.

1. Third option: Country A investing in technology and Country B in education is about investment choices, not production efficiency or opportunity cost related to comparative advantage.

1. Fourth option: Country A producing more rice per acre than Country B is an example of absolute advantage (higher productivity), not comparative advantage, as it doesn't consider opportunity cost.

So the second option is the correct example of comparative advantage.

Answer:

B. Factories in Country A and Country B produce the same number of tablet computers. Country A’s factories could be used instead to build more laptops than the factories in Country B.