Both Mergatroid and the Geebocks produce only gizmos and widgets. It is possible for Mergatroid to have
A) an absolute and a comparative advantage in both products.
B) an absolute but not a comparative advantage in both products.
C) neither a comparative nor an absolute advantage in both products.
D) a comparative but not an absolute advantage in both products.

Question

Quizplus · Accepted Answer

Mergatroid can have an absolute advantage in both products if it can produce more of both than the Geebocks. However, it cannot have a comparative advantage in both because comparative advantage is based on opportunity costs, and one entity cannot have a lower opportunity cost in both goods compared to another.

Both Mergatroid and the Geebocks Produce Only Gizmos and Widgets