Based on Table 3.1,which country or countries has an absolute advantage and a comparative advantage in shoes?
A)Mexico has an absolute and comparative advantage in shoes.
B)The United States has an absolute and comparative advantage in shoes.
C)The United States has a comparative advantage, and Mexico has an absolute advantage in shoes.
D)Mexico has a comparative advantage, and the United States has an absolute advantage in shoes.

Question

Quizplus · Accepted Answer

According to Table 3.1, Mexico has a lower opportunity cost (2 gallons of milk) to produce a pair of shoes compared to the United States (3 gallons of milk). Therefore, Mexico has a comparative advantage in shoe production. On the other hand, the United States has a higher productivity in shoe production (15 pairs of shoes vs. 10 pairs of shoes), indicating an absolute advantage in shoe production. Hence, D is the best choice.