Question

Assume the Macro Islands can produce 25 fishing boats or 150 jars of guava jelly in one hour. The Micro Islands can produce 30 fishing boats or 300 jars of guava jelly in the same time period. This data tells an economist that:________. a. the Macro Islands have an absolute advantage in producing fishing boats and the Micro Islands have an absolute advantage in producing guava jelly. b. the Micro Islands have an absolute advantage in producing fishing boats and the Macro Islands have an absolute advantage in producing guava jelly. c. the Macro Islands have a comparative advantage in producing fishing boats and the Micro Islands have a comparative advantage in producing guava jelly. d. the Micro Islands have a comparative in producing fishing boats and the Macro Islands have a comparative advantage in producing guava jelly. the Micro Islands have a comparative and absolute advantage in producing fishing boats.

Answer 1

Answer:

The correct answer is the option C: the Macro Islands have a comparative advantage in producing fishing boats and the Micro Islands have a comparative advantage in producing guava jelly.

Explanation:

To begin with the term of ''comparative advantage'' is refer to the quality of one country in comparison with another to produce in a better way, a more eficient way, a good. Therefore that when a country has a comparative advantage over another country it means that the first country can produce more of a good with less resources that the second country.

That is why, that the Macro Islands have a comparative advantage in producing fishing boats over the Micro islands due to the fact that there is a very little difference with the other country meanwhile the Micro Islands have a comparative advatange in the production of guava jelly due to the amount of goods that it can produce in the same amount of time with the great amount difference in comparison with the Macro Islands. Therefore that one country chooses to produce the good in which it is better in comparison with the other.