Assume that Honduras has a comparative advantage in producing bananas and exports bananas to Brazil. We can conclude that
A) Honduras has a lower opportunity cost of producing bananas relative to Brazil.
B) Honduras also has an absolute advantage in producing bananas relative to Brazil.
C) Brazil has an absolute disadvantage in producing bananas relative to Honduras.
D) Labor costs are higher for banana producers in Brazil than in Honduras.
Question 2
Refer to Figure 5-13. The market equilibrium price of gasoline is ________ per gallon.
A) 3.00 B) 3.75 C) 4.25 D) 5.00
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