Both absolute and comparative advantage theories assume that ________ is the only resource used in the production process.

Question

Quizplus · Accepted Answer

Both absolute and comparative advantage theories assume that labor is the only resource used in the production process. Absolute advantage theory states that a country can produce a good more efficiently than another country using the same amount of resources, while comparative advantage theory states that a country should specialize in producing a good for which it has the lowest opportunity cost (in terms of foregone production of another good) compared to another country. Both theories assume that labor is the only resource used in production, and that countries have different levels of productivity in using labor to produce goods.

Both Absolute and Comparative Advantage Theories Assume That ________ Is