Which statement about the following production possibilities chart is true: Units of output per worker day: Mexico Brazil Food: 1 3 Clothing: 3 6 A. Brazilian workers are the high-cost producers of both food and clothing. B. Mutual gains could be realized from trade if Mexico specialized in food production and Brazil in clothing production. C. Joint output would be maximized if Mexico specialized in the production of clothing and Brazil in the production of food. D. No gains from trade are possible because Brazilian workers produce more of both food and clothing than Mexican workers do. The answer is C. I chose D because Brazil outproduces Mexico in both items. Can anyone explain why C is the answer? Thanks.
Mexico: Opportunity Cost of producing 1 unit of clothing is 1/3 of unit of food. Brazil:Opportunity Cost of producing 1 unit of clothing is 1/2 of unit of food. mexico has a lower opportunity cost for producing clothing (comparitive advantage). So mexico will specialize in producing clothing while brazil will produce food.