If it takes one country two units of labor to produce a computer and three units of labor to produce a TV but it takes the other country three units of labor to produce a computer and four to produce a TV, then the first country has

Question

Quizplus · Accepted Answer

The first country requires fewer units of labor to produce both computers and TVs compared to the second country, indicating an absolute advantage in both. However, the comparative advantage is determined by the opportunity cost of producing one good over the other. The first country has a lower opportunity cost for producing computers (since it sacrifices less production of TVs compared to the second country when it chooses to produce computers), indicating a comparative advantage in computers only.

If It Takes One Country Two Units of Labor to Produce