Multiple Choice
Which of the following is the best measurement to use to determine who has the absolute advantage in producing a good?
90
views
2. Introductory Economic Models
PPF - Comparative Advantage and Absolute Advantage
Multiple Choice
Suppose Country A can produce 100 coffees per day and Country B can produce 80 coffees per day. Who has the absolute advantage in selling coffees?
A
Neither country has an absolute advantage
B
Country B
C
Both countries have the same absolute advantage
D
Country A
Verified step by step guidance1
Understand the concept of absolute advantage: A country has an absolute advantage in producing a good if it can produce more of that good with the same resources compared to another country.
Identify the production quantities given: Country A produces 100 coffees per day, and Country B produces 80 coffees per day.
Compare the production quantities directly since absolute advantage is about who produces more: 100 (Country A) versus 80 (Country B).
Determine which country produces more coffee per day: Since 100 > 80, Country A produces more coffee than Country B.
Conclude that Country A has the absolute advantage in producing (and thus selling) coffees because it can produce more coffee per day than Country B.
Related Videos
Related Practice
