42. Italy has comparative advantage in wine, Greece in olives. We may conclude:
Answer: D
Slopes of PPCs cannot be identical
The concept of comparative advantage implies that different countries specialize in the production of different goods based on their opportunity costs. Therefore, if Italy has a comparative advantage in wine and Greece in olives, it follows that the slopes of their Production Possibility Curves (PPCs) must differ, reflecting their unique opportunity costs.
A) Greek olive workers are more productive
This statement does not necessarily follow from the premise of comparative advantage. While Greek workers may be productive in olive production, it does not imply that they are more productive overall compared to Italian winemakers. Comparative advantage is based on opportunity costs rather than sheer productivity.
B) Greece devotes more resources to olives
This statement could be true but does not directly address the relationship between the comparative advantages and the slopes of the PPCs. Devoting more resources to olives does not imply that their PPC slope must be different from Italy's as it could still reflect different production possibilities depending on opportunity costs.
C) Italian winemakers are more productive
Similar to option A, this assertion does not necessarily hold true in the context of comparative advantage. Italian winemakers might not be more productive overall; they may simply have a lower opportunity cost in wine production compared to olives. Thus, this statement does not address the differences in PPC slopes.
D) Slopes of PPCs cannot be identical
This statement is correct because if Italy specializes in wine and Greece in olives, their Production Possibility Curves must reflect different opportunity costs for producing these goods. Therefore, the slopes of their PPCs cannot be identical, as this would contradict the foundational principle of comparative advantage.
Conclusion
The conclusion that the slopes of the PPCs cannot be identical is rooted in the definition of comparative advantage, which necessitates differing opportunity costs between countries. All other options fail to accurately reflect the core relationship between productivity, resource allocation, and comparative advantage, making option D the definitive correct choice.