Comparative Advantage via Opportunity Costs

Steps:

• Calculate opportunity cost of rice for each country: cotton forgone per unit of rice produced.
• Calculate opportunity cost of cotton for each country: rice forgone per unit of cotton produced.
• Identify country with lowest opportunity cost for rice as having comparative advantage in rice.
• Compare across countries to confirm the lowest cost holder.

Why B is correct:

• Country X has the lowest opportunity cost for rice, per the definition of comparative advantage as the ability to produce at lower opportunity cost relative to others.

Why the others are wrong:

• A: Country W's opportunity cost for cotton is not the lowest among the four.
• C: Country Y's opportunity cost for rice is higher than Country X's.
• D: Absolute advantage requires highest output per input, but Country Z does not produce the most cotton efficiently.

Final answer: B