Help with problem

Question

The following chart indicates the production possibilities of food and drink per day in Country A and Country B.

Units of Output Per Day
Country A	Country B
Food	9	5
Drink	7	5
Which of the following statements is most accurate?

A)	Mutual gains could be realized from trade if A specialized in drink production and B specialized in the food production.
	B)	Since B workers can produce more of food and drink than A workers, no gains from trade are possible.
	C)	Mutual gains could be realized from trade if A specialized in food production and B specialized in drink production.

I chose B because the opportunity cost of Country A producing drinks is 0.778, but Schweser says it's Answer A. Can anyone help me pls? :(

nar_bsoa · Answer

oops...i had messed it up!!!

Country A has comparative advantage in drink (it forgoes 7/9 food for producing 1 drink whereas country B forgoes 1 food for a drink. Hence country A is more efficient in producing drink). Similarly country B has comparative advantage in drink.

So the right answer is A.

@ portfolio manager - Sorry for the confusion. Hope this clarifies

nar_bsoa · Answer

I'm getting the answer as C. Am i missing something here

Country A - Food - 9/7 drink
Country A - Drink - 7/9 food
Country B - Food - 1 drink
Country B - Drink - 1 food

So, country A has a comparative advantage in food (9/7 drink vs. 1 drink in country B) whereas country B has comparative advantage in drink ( 1 vs 7/9). So mutual gains will result is A produces more of food and B produces more of drink

Any help is much appreciated...