Table 3-6

-Refer to Table 3-6. Which of the following is correct?
A)England has a comparative advantage in bread and Spain has an absolute advantage in cheese.
B)England has a comparative advantage in bread and Spain has an absolute advantage in neither good.
C)England has a comparative advantage in cheese and Spain has an absolute advantage in both goods.
D)England has a comparative advantage in both goods and Spain has an absolute advantage in cheese.

Question

Table 3-6
 
-Refer to Table 3-6. Which of the following is correct?
A)England has a comparative advantage in bread and Spain has an absolute advantage in cheese. 
B)England has a comparative advantage in bread and Spain has an absolute advantage in neither good. 
C)England has a comparative advantage in cheese and Spain has an absolute advantage in both goods. 
D)England has a comparative advantage in both goods and Spain has an absolute advantage in cheese.

Quizplus · Accepted Answer

Comparative advantage is determined by the opportunity cost of producing goods. If England has a comparative advantage in bread, it means it can produce bread at a lower opportunity cost than Spain. An absolute advantage means producing more of a good with the same resources. If Spain has an absolute advantage in neither good, it means it cannot produce more of either good compared to England with the same resources.

Table 3-6 -Refer to Table 3-6. Which of the Following Is Correct