If it takes one country one unit of labor to produce either a computer or a TV but it takes the other country two units of labor to produce a computer and only one to produce a TV, then the first country has

Question

Quizplus · Accepted Answer

The definition of comparative advantage is that a country can produce a good at a lower opportunity cost than another country. In this case, the first country has a lower opportunity cost of producing TVs, since it takes one unit of labor to produce a TV, compared to two units for the other country. Therefore, the first country has a comparative advantage in producing TVs. On the other hand, the second country has a comparative advantage in producing computers, since it takes one unit of labor to produce a computer, compared to two units for the first country. This means that the first country does not have a comparative advantage in producing computers, so option A and C can be eliminated. Additionally, since the other country can produce at a lower cost in at least one good, the first country does not have an absolute advantage in either good, so option B can be eliminated. Option D is the correct answer.

If It Takes One Country One Unit of Labor to Produce