Ask Question
Today, 01:28

The Macro Islands can produce either 250 bamboo towels or 500 botanical soaps using all its resources. The Micro Islands can produce either 30 bamboo towels or 300 botanical soaps using all its resources. Based on this information, which of the following is true?

The Macro Islands have a comparative advantage in producing both goods.

The Micro Islands have a comparative advantage in producing neither good.

The Micro Islands have a comparative advantage in producing bamboo towels.

The Micro Islands have a comparative advantage in producing botanical soaps.

The Micro Islands have a comparative advantage in producing both goods.

+5
Answers (1)
  1. Today, 03:50
    0
    The Micro Islands have a comparative advantage in producing botanical soaps.

    Explanation:

    Comparative advantage can be defined as the ability of an economy to produce a good at lower opportunity cost than other economies. This enables the economy sell the product at lower prices, therefore having higher margin of profit than other economies.

    The opportunity cost of Micro Island in producing 300 botanical soaps is the cost of producing 30 bamboo towels. The opportunity cost is quite low.

    While for Macro Island the opportunity cost of producing 500 botanical soaps is 250 bamboo towels. The opportunity cost is higher than for Micro Island.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “The Macro Islands can produce either 250 bamboo towels or 500 botanical soaps using all its resources. The Micro Islands can produce either ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers