Question

Sofia, who lives in chicago, knits and sells alpaca-wool scarves. she spends 15 hours knitting one scarf. maria, who also knits, lives in lima, peru. she spends 12 hours knitting one scarf. which of these statements is true?

Answer 1

A producer is said to have an absolute advantage over another producer when he required less amount of input to produce the same good compared to the other producer.

While a producer is said to have a comparative advantage over another producer when he produces his goods at a lesser opportunity cost compared to the other produer.

Here, time is one of the inputs used in production and Maria produces a scarf at a lesser time compared to Sofia. Thus, Maria has an absolute advantage over Maria in the production of scarves.

Therefore, the true statement is "Maria has an absolute advantage over Sofia".