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Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. Which of the following statements is true? Alpha should export to Beta, but Beta should not export to Alpha. Since Alpha has an absolute advantage in both goods, no mutual gains from trade are possible. If Alpha specializes in growing oranges and Beta specializes in growing apples, they could both gain by specialization and trade. If Alpha specializes in growing apples and Beta specializes in growing oranges, they could both gain by specialization and trade.

Respuesta :

Answer:

If Alpha specializes in growing apples and Beta specializes in growing oranges, they could both gain by specialization and trade.

Explanation:

A country has comparative advantage in production if it produces at a lower opportunity cost when compared to other countries. A country should specialise in the production of goods for which it has a comparative advantage

Alpha

Opportunity cost in producing oranges = 9/18 = 0.5 apples

Opportunity cost in producing applies =  18/9 = 2 oranges

Beta

Opportunity cost in producing oranges = 4 / 16 = 0.25

Opportunity cost in producing applies = 16/4 = 4 oranges

Alpha has an opportunity cost in the production of apples while beta has a comparative advantage in the production of oranges

Alpha should specialise in the production of apples

Beta should specialise in the production of oranges

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