Table 18-3
$\begin{array}{r}
\text { Output Per Unit Labor Input }\
\begin{array}{lcc}
& \underline {\text { Cotton }}& \underline {\text { Wheat}}\
\text { Egypt} \quad\quad\quad& \quad \quad20\quad\quad & \quad\quad24\quad\quad \
\text { United States } & \quad \quad2\quad\quad &\quad\quad 12\quad\quad \
\end{array}
\end{array}$

-The data in Table 18-3 indicate that the United States has
A) an absolute advantage in both goods, and a comparative advantage in cotton.
B) an absolute advantage in both goods, and a comparative advantage in wheat.
C) only a comparative advantage in wheat.
D) only a comparative advantage in cotton.

Question

Table 18-3
 $\begin{array}{r}
\text { Output Per Unit Labor Input }\
\begin{array}{lcc}
& \underline {\text { Cotton }}& \underline {\text { Wheat}}\
\text {  Egypt} \quad\quad\quad& \quad \quad20\quad\quad &  \quad\quad24\quad\quad \
\text { United States } & \quad \quad2\quad\quad &\quad\quad 12\quad\quad  \
\end{array}
\end{array}$

-The data in Table 18-3 indicate that the United States has
A) an absolute advantage in both goods, and a comparative advantage in cotton.
B) an absolute advantage in both goods, and a comparative advantage in wheat.
C) only a comparative advantage in wheat.
D) only a comparative advantage in cotton.

Quizplus · Accepted Answer

The United States has an absolute advantage in both cotton and wheat, as it can produce more output per unit of labor input in both goods compared to Egypt. However, the United States has a comparative advantage in wheat, as it has a lower opportunity cost of producing wheat in terms of foregone cotton production. Specifically, the United States can produce one unit of wheat by giving up only half a unit of cotton, while Egypt needs to give up 2.4 units of cotton to produce one unit of wheat. Therefore, the United States should specialize in producing wheat and trade with Egypt for cotton, while Egypt should specialize in producing cotton and trade with the United States for wheat.

Table 18-3 -The Data in Table 18-3 Indicate That the United States