CFA Practice Question

There are 341 practice questions for this study session.

CFA Practice Question

Suppose the economy of Carnivalland can produce either 6 corn dogs or 3 toy animals per day while the economy of Fairland can produce either 8 corn dogs or 16 toy animals per day. ______ has a comparative advantage in the production of corn dogs while ______ has a comparative advantage in the production of toy animals.
A. Fairland; Carnivalland
B. Fairland; Fairland
C. Carnivalland; Fairland
Explanation: In Carnivalland, the opportunity cost of 1 corn dog is 1/2 of a toy animal, while in Fairland, the opportunity cost of 1 corn dog is 2 toy animals. Thus, since Carnivalland has to give up fewer toy animals per corn dog, they have a comparative advantage

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