Scenario: A shoe manufacturer has factories in two countries, Country X and Country Y. Shoe manufacturing involves two main tasks-designing the shoe and stitching it. The value added per hour in each activity by workers in the two countries is shown in the table below.

-Refer to the scenario above.Identify the correct statement.

Question

Scenario: A shoe manufacturer has factories in two countries, Country X and Country Y. Shoe manufacturing involves two main tasks-designing the shoe and stitching it. The value added per hour in each activity by workers in the two countries is shown in the table below.
 
-Refer to the scenario above.Identify the correct statement.

Quizplus · Accepted Answer

Country X has a comparative advantage in designing shoes if it can produce designs at a lower opportunity cost compared to Country Y, even if Country Y can produce more of both goods overall (indicating absolute advantage). Comparative advantage drives trade decisions, as countries benefit from specializing in goods where they hold this advantage.

Scenario: a Shoe Manufacturer Has Factories in Two Countries, Country