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Company A can borrow yen at 14.1 percent and dollars at 13.2 percent. Company B can borrow yen at 15.5 percent and dollars at 13.667 percent. At what interest rates, do company A and B respectively have a comparative advantage?a. A; 13.2 percent, B: 15.5 percentb. A: 14.1 percent, B: 13.667 percentc. B has comparative advantage in both marketsd. A has a comparative advantage in both markets

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Answer:

A has a comparative advantage in both markets.

Explanation:A comparative advantage is a term used in Economics to describe the ability or capacity of a business Organisation to enjoy certain economic benefits due to certain factors that places it at a favourable level.

Comparative advantage can be achieved through the sale of products at a cheaper price when compared to other competitors due to

(1) Reduced interest in loans borrowed from bank when compared to other competitors.

(2) Reduced foreign exchange rate obtained from banks when compared to other competitors.

(3) Due to the large size of a business,which has helped the company to enjoy Economies of scale.

(4) Due to improved efficiency in process which has helped the company to have a Reduced cost of operation which made it charge less for products when compared to other competitors etc.

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