Suppose that Iceland can produce 40 units of food per person per year or 16 units of clothing per person per year,but Lavaland can produce 16 units of food per person per year or 8 units of clothing per person per year.Which of the following statements is the most accurate?
A) Lavaland has a comparative advantage, but not an absolute advantage, in producing clothing.
B) Iceland has a comparative advantage, but not an absolute advantage, in producing food.
C) Lavaland has both a comparative and an absolute advantage in producing clothing.
D) Iceland has an absolute advantage, but not a comparative advantage, in producing food.
Correct Answer:
Verified
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