Suppose that Iceland can produce 32 units of food per person per year or 16 units of clothing per person per year,but Lavaland can produce 24 units of food per person per year or 12 units of clothing per person per year.Which of the following statements is the most accurate?
A) Lavaland has a comparative advantage, but not an absolute advantage, in producing clothing.
B) Iceland has an absolute advantage in producing food but will not trade with Lavaland.
C) Iceland has a comparative advantage, but not an absolute advantage, in producing food.
D) Lavaland has both a comparative and an absolute advantage in producing clothing.
Correct Answer:
Verified
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