Suppose the production of 12 tons of copper in the United States requires the same amount of resources as the production of 3 tons of aluminum.In Mexico,12 tons of copper requires the same amount of resources as 2 tons of aluminum.Implicitly
A)Mexico has a comparative advantage in producing copper.
B)The United States has an absolute advantage in producing aluminum.
C)Mexico has an absolute advantage in producing copper.
D)Neither country has a comparative advantage in producing aluminum.

Question

Quizplus · Accepted Answer

The concept of comparative advantage states that a country should produce the good that it can produce at a lower opportunity cost than another country. In this case, Mexico can produce 6 tons of aluminum with the resources required to produce 12 tons of copper, while the United States can produce only 3 tons of aluminum with the same resources. Therefore, Mexico has a comparative advantage in producing copper because it gives up less in terms of aluminum production to produce a given amount of copper. There is not enough information given to determine whether the United States has an absolute advantage in producing aluminum or whether Mexico has an absolute advantage in producing copper. The concept of absolute advantage simply means that a country can produce a good using fewer resources than another country, regardless of opportunity cost.

Suppose the Production of 12 Tons of Copper in the United