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Two countries are deciding if they want to trade: Madagascar and Germany. In an agricultural sector of the economy, each country's production can be summarized
Two countries are deciding if they want to trade: Madagascar and Germany. In an agricultural sector of the economy, each country's production can be summarized in the table below. Production of Coffee Beans & Tea Leaves by Two Countries Madagascar Germany Coffee beans (pounds) Black tea leaves (pounds) Coffee beans (pounds) Black tea leaves (pounds) 300 0 600 0 0 750 0 1300 To summarize the above table in words: Madagascar can produce 300 pounds of coffee beans and 0 tea OR 750 pounds of tea leaves and 0 coffee or some linear ratio in between. Germany can produce 600 pounds of coffee beans and 0 tea OR 1300 pounds of tea leaves and 0 coffee or some linear ratio in between. Based on the law of comparative advantage, _______ should produce coffee beans because: Group of answer choices Neither - no gains from trade can exist because Germany is a larger producer in both goods. Germany; Germany has the absolute advantage producing coffee Germany; Germany has the comparative advantage producing coffee Madagascar; Madagascar has the comparative advantage producing coffee Madagascar; Madagascar has the absolute advantage producing coffee
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