If nation A can produce 5 units of good X or 10 units of good Y and nation B can produce 4 units of good X or 12 units of good Y we can conclude that nation A has a
A) Comparative advantage in X and an absolute advantage in Y
B) Comparative advantage in X and an absolute advantage in X
C) Comparative advantage in Y and an absolute advantage in X
D) Comparative advantage in Y and an absolute advantage in Y

Question

Quizplus · Accepted Answer

Nation A can produce 5 units of X, but nation B can only produce 4 units of X. Therefore, nation A has a comparative advantage in producing good X. Similarly, Nation A can produce 10 units of Y, while nation B can only produce 12 units of Y. Hence, nation B has an absolute advantage in producing good Y.

If Nation a Can Produce 5 Units of Good X