Question

In Canada, the average worker can produce 10 computers or six cars a year. In the United States, the average worker can produce 12 computers or 10 cars a year. Which of the following statements is CORRECT? A. The United States has an absolute advantage in both goods, but a comparative advantage in producing cars. B. The United States has a comparative advantage in producing computers. C. Canada has an absolute advantage in producing both goods. D. Canada has a comparative advantage in the production of cars.

Answer 1

Answer:

A. The United States has an absolute advantage in both goods, but a comparative advantage in producing cars.

Explanation:

From the question above, it is easily evident that the average worker in USA is producing more goods as compared to the average worker in Canada.

This gives the USA, absolute advantage in both the products. But there is a comparative advantage as well with the USA in producing cars as compared to Canada because the average worker in USA is almost producing 67% more cars in USA than in Canada.

Hope this clear,

Good luck buddy.