Refer to the information provided in Table 33.5 below to answer the question(s) that follow. Cashews are measured in bushels and tea is measured in pounds (lbs.)
Table 33.5
-Refer to Table 33.5. ________ has a comparative advantage in tea and ________ has an absolute advantage in tea.
A) India; neither
B) Neither; neither
C) Vietnam; neither
D) Vietnam; India

Question

Refer to the information provided in Table 33.5 below to answer the question(s) that follow. Cashews are measured in bushels and tea is measured in pounds (lbs.)
Table 33.5 
-Refer to Table 33.5. ________ has a comparative advantage in tea and ________ has an absolute advantage in tea.
A) India; neither 
B) Neither; neither 
C) Vietnam; neither 
D) Vietnam; India

Quizplus · Accepted Answer

Comparative advantage refers to the ability of a country to produce a good at a lower opportunity cost than another country. Looking at the table, we can see that India has an opportunity cost of 2 bushels of cashews for every pound of tea produced while Vietnam has an opportunity cost of only 1 bushel of cashews for every pound of tea produced. Therefore, Vietnam has a comparative advantage in tea.

Absolute advantage refers to a country's ability to produce a good using fewer resources than another country. Looking at the table, we cannot determine which country has an absolute advantage in tea as we do not know the amount of resources required to produce a unit of tea in each country. Therefore, the answer is that neither country has an absolute advantage in tea.

Refer to the Information Provided in Table 33