Figure 2.7

Figure 2.7 shows the production possibility frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews.
-Refer to Figure 2.7. If the two countries have the same amount of resources and the same technological knowledge, which country has an absolute advantage in the production of cotton?

Question

Figure 2.7
  
Figure 2.7 shows the production possibility frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews.
-Refer to Figure 2.7. If the two countries have the same amount of resources and the same technological knowledge, which country has an absolute advantage in the production of cotton?

Quizplus · Accepted Answer

Indonesia has an absolute advantage in the production of cotton because it can produce more cotton with the same amount of resources and technology than Pakistan.

Figure 2.7 Figure 2.7 Shows the Production Possibility Frontiers for Pakistan and Possibility