A bottle of wine can be produced in France with 2 labor hours, and in the United States with 4 labor hours. A pound of beef can be produced in France with 1 labor hour, and in the United States with ½ labor hours. Which of the following is true in this context?
A)France has a comparative advantage in the production of beef.
B)France has an absolute advantage in the production of beef.
C)The United States has an absolute, but not a comparative advantage in the production of beef.
D)The United States has both comparative and absolute advantage in the production of beef.

Question

Quizplus · Accepted Answer

The United States requires fewer labor hours to produce a pound of beef (0.5 hours) compared to France (1 hour), giving it an absolute advantage. It also has a comparative advantage because it sacrifices less wine production per unit of beef compared to France.

A Bottle of Wine Can Be Produced in France with 2