Iceland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Lavaland can produce 36 units of food per year or 18 units of clothing. Which of the following is true?

Question

Quizplus · Accepted Answer

Lavaland has an absolute advantage in producing both food and clothing because it can produce more of both goods than Iceland. However, it does not have a comparative advantage in clothing because the opportunity cost of producing clothing is the same for both countries (2 units of food per unit of clothing).

Iceland Can Produce 32 Units of Food Per Person Per