Consider a two-country, two-commodity model. The table given below shows the units of good X and good Y produced in country A and country B per labor hour. Which of the following statements is true? $$\begin{array} { | c | c | c | }
\hline \text { Productivity } & \text { Country A } & \text { Country B } \
\hline \text { Good X } & 1.00 & 0.50 \
\hline \text { Good Y } & 0.20 & 0.70 \
\hline
\end{array}$$
A)Country B has an absolute advantage in the production of both good X and good Y.
B)Country A has an absolute advantage in the production of good X.
C)Country A has an absolute advantage in the production of both good X and good Y.
D)Country B has an absolute advantage in the production of good X.

Question

Consider a two-country, two-commodity model. The table given below shows the units of good X and good Y produced in country A and country B per labor hour. Which of the following statements is true? $$\begin{array} { | c | c | c | } 
\hline \text { Productivity } & \text { Country A } & \text { Country B } \
\hline \text { Good X } & 1.00 & 0.50 \
\hline \text { Good Y } & 0.20 & 0.70 \
\hline
\end{array}$$
A)Country B has an absolute advantage in the production of both good X and good Y.
B)Country A has an absolute advantage in the production of good X.
C)Country A has an absolute advantage in the production of both good X and good Y.
D)Country B has an absolute advantage in the production of good X.

Quizplus · Accepted Answer

Country A has an absolute advantage in the production of good X because it produces 1.00 units per labor hour compared to Country B's 0.50 units. However, Country B has an absolute advantage in the production of good Y, producing 0.70 units per labor hour compared to Country A's 0.20 units.

Consider a Two-Country, Two-Commodity Model A)Country B Has an Absolute Advantage in the Production of the Units