U.S. U.K Wheat 12 10 Cloth 8 6 The table above shows United States and United Kingdom production of wheat (bushels per hour) and cloth (yards per hour). i.The United States has an absolute advantage in the production of both goods. ii.The United Kingdom has a comparative advantage in the production of wheat. iii.The opportunity cost of cloth is lower in the United States. iv.The opportunity cost of cloth is lower in the United Kingdom. Which one of the following is true? a) only i, ii and iv are correct b) Only i, ii, and iii are correct c) Only i and ii are correct d) Only iii is correct

U.S. U.K Wheat 12 10 Cloth 8 6 The table above shows United States and United Kingdom production of wheat (bushels per hour) and cloth (yards per hour). i.The United States has an absolute advantage in the production of both goods. ii.The United Kingdom has a comparative advantage in the production of wheat. iii.The opportunity cost of cloth is lower in the United States. iv.The opportunity cost of cloth is lower in the United Kingdom. Which one of the following is true? a) only i, ii and iv are correct b) Only i, ii, and iii are correct c) Only i and ii are correct d) Only iii is correct

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter33: International Trade

Section: Chapter Questions

Problem 30P: In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10...

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Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.

Question

	U.S.	U.K
Wheat	12	10
Cloth	8	6

The table above shows United States and United Kingdom production of wheat (bushels per hour) and cloth (yards per hour).

i.The United States has an absolute advantage in the production of both goods.

ii.The United Kingdom has a comparative advantage in the production of wheat.

iii.The opportunity cost of cloth is lower in the United States.

iv.The opportunity cost of cloth is lower in the United Kingdom.

Which one of the following is true?

a) only i, ii and iv are correct

b) Only i, ii, and iii are correct

c) Only i and ii are correct

d) Only iii is correct

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