When Mike has an absolute advantage in the production of two goods over Tommy,Mike
A)is more productive in producing both goods than Tommy.
B)is better off if he does not engage in specialisation and trade with Tommy.
C)cannot gain from trade with Tommy.
D)is less productive than Tommy.
E)always has a comparative advantage over Tommy in the production of both goods.

Question

Quizplus · Accepted Answer

Absolute advantage means that Mike can produce more of both goods than Tommy, therefore he is more productive in producing both goods than Tommy.

When Mike Has an Absolute Advantage in the Production of Two