Suppose Russia can produce either 600 pianos or 400 HDTVs,and Italy can produce either 300 pianos or 150 HDTVs.Implicitly,Russia has
A)Both an absolute and a comparative advantage in HDTVs.
B)A comparative but not necessarily an absolute advantage in HDTVs.
C)An absolute but not necessarily a comparative advantage in HDTVs.
D)Neither a comparative nor an absolute advantage in HDTVs.

Question

Quizplus · Accepted Answer

To determine comparative advantage, we need to look at the opportunity cost of producing each good. 
For Russia, the opportunity cost of producing 1 piano is 2/3 HDTVs (600 pianos / 400 HDTVs = 3/2 or 1.5; reciprocal is 2/3). 
For Italy, the opportunity cost of producing 1 piano is 1/2 HDTVs (300 pianos / 150 HDTVs = 2/1 or 2; reciprocal is 1/2). 
Since Russia has a lower opportunity cost of producing HDTVs, it has a comparative advantage in HDTVs. 
However, we cannot determine absolute advantage based on this information alone, as we do not know the total production capacity of each country.

Suppose Russia Can Produce Either 600 Pianos or 400 HDTVs,and