Question

Say that Aliceland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Georgeland can produce 16 units of food per year or 8 units of clothing. Which of the following is true?
(A) Aliceland has a comparative advantage, but not absolute advantage, in producing food.
(B) aliceland has an absolute advantage, but not comparative advantage, in producing food.
(C) Georgeland has a comparative advantage, but not an absolute advantage, in producing clothing.

Answer 1

Answer:

B) aliceland has an absolute advantage, but not comparative advantage, in producing food.

Explanation:

Aliceland has absolute advantage in the production of food because it produces more food (32) than Georgeland that produces (16). Aliceland doesn't have a comparative advantage because both lands have the same comparative advantage in the production of food.

Comparative advantage of Aliceland in food production = 16 / 32 = 0.5

Comparative advantage of Georgeland in food production = 8 / 16 = 0.5

Aliceland has absolute advantage in the production of food and cloth but no comparative advantage in either.

Georgeland doesn't have absolute or comparative advantage in the production of food and clothes.

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