Question

Choose the statement that CORRECTLY explains Absolute Advantage or Comparative Advantage. A) Absolute Advantage is the ability of a nation or region to produce more of a certain product than another country or region. B) One country can have a Comparative Advantage over another country with some products, and an Absolute Advantage over that same country in another product. C) The country of Joetopia produces 4 billion gallons of cola, while the country of Amystan makes 400 million gallons of soda. Joetopia has an Absolute Advantage. D)Lana can bake 10 cakes in 8 hours, while Lenny can bake 4 cakes in 8 hours. Lenny has an Absolute Advantage in making cakes. E)The country of Rockonya makes 1 television every 5 hours and 1 car every 20 hours, while the country of Jamonia makes 1 television every 24 hours and 1 car every 12 hours. Rockonya has a Comparative Advantage in making televisions.

Answer 1

Answer:

A

B

C

E

Explanation:

On usatestprep

Answer 2

The correct answer is option E:

The country of Rockonya makes 1 television every 5 hours and 1 car every 20 hours, while the country of Jamonia makes 1 television every 24 hours and 1 car every 12 hours. Rockonya has a Comparative Advantage in making televisions.

A comparative advantage of one country over another in the production of a certain good or service is a special facility with respect to a certain key aspect that the first country has more than the second. In this case, the characteristic to be compared is the greater productivity that Rockonya has in the manufacture of televisions.

An absolute advantage takes into account the quantification of a key aspect for the production of a certain good or service without establishing any comparison with another country.  

In the example it would be: Rockonya has a productivity of 1 TV per day.