Maximum Feasible Hourly Production Rates for Either
Food or Cloth Using All Available Resources

-Using the data in the above table and assuming constant opportunity costs, it is correct to state that
A)the United States has an absolute advantage in producing cloth.
B)Mexico has a comparative advantage in producing food.
C)the United States has a comparative advantage in producing both food and cloth.
D)Mexico has an absolute advantage in producing both food and cloth.

Question

Maximum Feasible Hourly Production Rates for Either
Food or Cloth Using All Available Resources
 
-Using the data in the above table and assuming constant opportunity costs, it is correct to state that
A)the United States has an absolute advantage in producing cloth. 
B)Mexico has a comparative advantage in producing food. 
C)the United States has a comparative advantage in producing both food and cloth. 
D)Mexico has an absolute advantage in producing both food and cloth.

Quizplus · Accepted Answer

According to the table, Mexico has a lower opportunity cost for producing food compared to cloth, while the United States has a lower opportunity cost for producing cloth compared to food. This means that Mexico has a comparative advantage in producing food and the United States has a comparative advantage in producing cloth. Absolute advantage refers to producing a good using fewer resources than another country, which cannot be determined solely based on the data in the table. Therefore, option A and D are not correct. Also, option C is incorrect because the United States has a comparative advantage in producing only cloth, not food.