(a) Microville has the absolute advantage producing cars. Because the most it can produce is 10 while Macroville can only produce 5.
(b) The opportunity cost is 5 cars if Macroville decides to use all of its resources and produce 20 boats.
(c) Microville has the comparative advantage in producing cars? Because its opportunity cost for 1 car is 1 boat while Macroville's cost for 1 car is 4 boats.
(d) If each country were to specialize in producing either cars or boats and then trade for the other product, Macroville makes 20 boats and Microville makes 10 cars. Each country produces the goods it has a comparative advantage in. Cars for Microville and boats for Macroville.
Answer:
Remember that correlation does not imply causation. Just because two things have a correlate with one another, it does not mean that we can jump to an conclusion.
If we look at the graph below, we can see that the rate of diagnosed autism and sales of organic food have an almost perfect correlation. However, we know for a fact that organic food does not cause autism- it just so happens that they correlate with one another.
That is why correlations cannot show cause and effect. To prove that a correlation does so, further studies and experiments must be done.