Asked by Rajbeer Sandhu on May 14, 2024
Verified
Country A can produce both wheat and oranges using fewer resources than country
A) Country A has a comparative advantage in producing both goods.
B) Country A has an absolute advantage in producing both goods.
C) Country B has no comparative advantage.
D) Country B must have an absolute advantage in producing one of the goods.
Comparative Advantage
A theory that suggests a country should specialize in producing and exporting goods and services for which it has the lowest opportunity cost.
Resources
Land, labor, capital, and entrepreneurial ability used to produce goods and services.
- Examine the theories underpinning comparative and absolute advantage in the context of world trade.
Verified Answer
AR
Amber R RodriguezMay 21, 2024
Final Answer :
B
Explanation :
Country A having the ability to produce both wheat and oranges using fewer resources than country B indicates that Country A has an absolute advantage in producing both goods, not necessarily a comparative advantage. Comparative advantage involves producing a good at a lower opportunity cost, not necessarily with fewer resources.
Learning Objectives
- Examine the theories underpinning comparative and absolute advantage in the context of world trade.
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