Question 6

Grand Coast can produce fish at a lower opportunity cost than Toland.

This statement accurately reflects the comparative advantage that Grand Coast holds in fish production, which is vital for understanding the trade dynamics between the two countries.

A) Grand Coast has the advantage in both timber and fish.

This option is incorrect because it suggests that Grand Coast is more efficient in producing both goods, which contradicts the concept of comparative advantage where typically one country will have a relative efficiency in one good over another.

B) Toland has the comparative advantage in fish.

This statement is incorrect as it misidentifies the country with the comparative advantage. The correct analysis shows that Grand Coast holds a lower opportunity cost in fish production compared to Toland.

C) Toland can produce timber at a lower opportunity cost than Grand Coast.

While this may be a possibility, the statement does not accurately reflect the comparative advantages between the two countries as outlined in the context. The focus is on fish production for this question, making this option irrelevant.

D) Grand Coast can produce fish at a lower opportunity cost than Toland.

This statement is correct as it indicates that Grand Coast has a comparative advantage in fish production, meaning it sacrifices less in terms of timber production when choosing to produce fish compared to Toland.

Conclusion

The correct answer, D, clearly illustrates the comparative advantage of Grand Coast in fish production, a crucial aspect of their trade relationship with Toland. Other options either misrepresent the comparative advantages or are irrelevant to the question, thereby failing to capture the essence of their trade dynamics.