In a two-country two-good model, if a country has an absolute advantage in the production of a certain good, it implies that:
A)it is not possible that this country can gain by importing this good from the other country.
B)this country also has a comparative advantage in the production of this good.
C)it has greater resources than the other country.
D)this country has higher labor productivity in the production of this good.

Question

Quizplus · Accepted Answer

Absolute advantage refers to a country's ability to produce a good using fewer resources (including labor) than another country. Therefore, if a country has an absolute advantage in the production of a certain good, it implies that it has higher labor productivity in the production of this good. This does not necessarily mean that the country also has a comparative advantage in the production of this good, as comparative advantage takes into account the opportunity cost of producing one good over another. Therefore, choice B is not necessarily true. Choices A and C are also incorrect, as having an absolute advantage does not necessarily mean that it is not possible or that the country has greater resources than the other country.

In a Two-Country Two-Good Model, If a Country Has an Absolute