Which of the following is true?

Question

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.

Which of the following is true?

Select one:

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

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

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

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

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

I initially selected C, but go it incorrect. Can someone please explain this?

Answer 1

For the Macros if the produce 1 less Bamboo they can produce 2 more soaps. or The opportunity cost of producing a Bamboo is two soap. The micro if the produce 1 Bamboo those resources could have produced ten soaps. It cost the micros 10 soaps to produce one more bamboo. The Micros are relative better at producing soap and have the Comparative advantage in it.