Question

Suppose that Canada and Australia are the only two countries in the world. Suppose also that in Australia, an acre of land can produce 75 tons of apples or 60 bushels of oranges, while in Canada, an acre of land can produce 60 tons of apples or 150 bushels of oranges. Which of the following statements are true? (Select all that apply) ? A. Canada has an absolute advantage in the production of apples because it has higher productivity in apples.B. Canada has an absolute advantage in the production of oranges because it has higher productivity in oranges. C. Australia has an absolute advantage in the production of apples because it has higher productivity in apples. D. Australia has an absolute advantage in the production of oranges because it has higher productivity in oranges.

Answer 1

Answer:

B. Canada has an absolute advantage in the production of oranges because it has higher productivity in oranges. C. Australia has an absolute advantage in the production of apples because it has higher productivity in apples.

Explanation:

A country has absolute advantage when it produces greater quantity of a product at the same cost when compared to another country.

Australia produces more apples; 75 tons when compared to 60 tons produced by Canada.

Canada produces more oranges; 150 bushels when compared to 60 bushels produced by Australia.

Australia has an absolute advantage in the production of Apples and Canada has an absolute advantage in the production of oranges.

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