Question

Thailand has a comparative advantage in rice and an absolute advantage in cell phones Indonesia has a comparative advantage in cell phones and an absolute advantage in rice. According to this scenario
a. Indonesia should export rice and import cell phones
b. Indonesia should export both cell phones and rice
c. Thailand should import both cell phones and rice
d. Thailand should export rice and import cell phones

Answer 1

Answer:

d. Thailand should export rice and import cell phones

Explanation:

Analyzing the question, it is correct to say that Thailand should export rice and import cell phones.

To understand why this statement is correct, we need to understand the concept of comparative advantage and absolute advantage.

The comparative advantage occurs when a country has great efficiency in producing a certain good, that is, the production is specialized and therefore advantageous in relation to another country. So it is correct to say that Thailand, having a comparative advantage in rice, should export rice to achieve greater economic advantage.

The absolute advantage, on the other hand, corresponds to the production of a good with lower costs than another country, but Thailand should import cell phones because Indonesia has a comparative advantage in cell phones, which makes it more competitive than Thailand in this segment.