Say that Alland 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? Question 35 options: Georgeland has a comparative advantage, but not an absolute advantage, in producing clothing. Georgeland has both a comparative and absolute advantage in producing clothing. Alland has a comparative advantage, but not an absolute advantage, in producing food. Alland has an absolute advantage, but not comparative advantage, in producing food.

Name: Say that Alland can produce 32 units of food per person per year or 16
Uploaded: 2022-12-02T21:52:30.000Z
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Description: Say that Alland 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? Question 35 options: Georgeland

Absolute advantage indicates the ability of an economy to produce a good more efficiently with the same inputs, compared to other trading partners. Comparative advantage is the ability of a country to produce a good at a lower opportunity cost compared to other trading partners.A country has an absolute advantage in producing a good over another country if it uses fewer resources to produce that good. Absolute advantage can be the result of a country’s natural endowment. Alland can produce more of both food and clothing compared to Georgeland. Thus, Alland has an absolute advantage over georgeland in terms of food and clothing production. Comparative advantage is based on opportunity cost, or the production of one good foregone for the production of the other. For Alland, either 32 units of food is produced or 16 units of cloth. So the opportunity costs are:Opportunity cost of food= 1632 units of cloth = 0.5 units of clothOpportunity cost of cloth = 3216units of food = 2 units of food For Georgeland, either 16 units of food is produced or 8 units of cloth. So the opportunity costs are:Opportunity cost of food= 816 units of cloth = 0.5 units of clothOpportunity cost of cloth = 168units of food = 2 units of food As both the countries have same opportunity cost, therefore no country has comparative advantage over the other. Therefore, option 4 is correct stating Alland has an absolute advantage in food production but not a comparative advantage.As none of the countries have a comparative advantage over each other, therefor options 1,2 and 3 are incorrect.

Answered: Say that Alland can produce 32 units of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Say that Alland 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?

Question 35 options:

	Georgeland has a comparative advantage, but not an absolute advantage, in producing clothing.
	Georgeland has both a comparative and absolute advantage in producing clothing.
	Alland has a comparative advantage, but not an absolute advantage, in producing food.
	Alland has an absolute advantage, but not comparative advantage, in producing food.

Definition Video Definition Ability of a country to produce more output with a given level of input or to produce the same level of output with a lower level of input as compared to the other countries. For example, if Country A produces 200 units with the help of 10 units of labor, and Country B produces 300 units with 10 units of labor, Country A has an absolute advantage in the production of the good. Video

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