If with one unit of labor the U.S. can produce 20 units of computer software and 10 units of computer hardware and China can produce 6 units of software and 4 units of hardware then

Question

Quizplus · Accepted Answer

Comparative advantage refers to the ability of a country to produce a particular good or service at a lower opportunity cost than another country. In this case, the U.S. can produce 20 units of software at the cost of 10 units of hardware. On the other hand, China can produce 6 units of software at the cost of 4 units of hardware. Therefore, the U.S. has a comparative advantage in software while China has a comparative advantage in hardware. Absolute advantage refers to the ability of a country to produce more goods or services with the same amount of resources or with fewer resources compared to another country. The question does not provide information on the absolute advantage of either country, making options A and B incorrect. Option D is also incorrect as it contradicts the information given in the question, which states that China's production capabilities for both goods are lower than that of the U.S.

If with One Unit of Labor the U