France has a comparative advantage producing wine and Germany has a comparative advantage producing schnitzel.
Answer: Option E.
Explanation:
Wine is an alcoholic drink, whereas schnitzel is basically a slice of meat which is fried in fat. When it comes to production of wine and schnitzel in France and Germany, we can say that France has a comparative advantage producing wine and Germany has a comparative advantage producing schnitzel. Say for example: When France manufacturers one bottle of wine, it manufacture two fewer pounds of schnitzel. Similarly, when Germany produces 1 more bottle of wine, it produces 3 fewer pounds of schnitzel. Thus, France’s chance of producing wine–2 pounds of schnitzel–is less than Germany’s–3 pounds of schnitzel.
