Recall the Application about productivity in the nation of Latvia in the 1990s to answer the following question(s).
-According to this Application, in the 1990s EU countries had ________ in the production of all products compared to Latvia.
A) an absolute advantage and a comparative advantage
B) an absolute advantage but not a comparative advantage
C) a comparative advantage but not an absolute advantage
D) neither an absolute advantage nor a comparative advantage

Question

Quizplus · Accepted Answer

EU countries had an absolute advantage in the production of all products compared to Latvia, meaning they could produce these goods more efficiently. However, having an absolute advantage does not necessarily imply having a comparative advantage, which is about producing goods at a lower opportunity cost. Comparative advantage determines how trade can benefit all parties involved, even when one is more efficient in all areas.

Recall the Application About Productivity in the Nation of Latvia