Brazil can produce one unit of sugar cane for one unit of labor and one iPod for eight units of labor, and China can produce one unit of sugar cane for two units of labor and one iPod for four units of labor. Which of the following is TRUE?
A) Brazil has a comparative advantage in sugar cane production and an absolute advantage in iPod production.
B) Both countries have a comparative in sugar cane production.
C) China has an absolute advantage in production of both goods.
D) Brazil has both a comparative advantage and an absolute advantage in sugar cane production.

Question

Quizplus · Accepted Answer

Brazil has a comparative advantage in sugar cane production because it can produce it with fewer units of labor than China. Brazil also has an absolute advantage in sugar cane production because it can produce more sugar cane than China with the same amount of labor.

Brazil Can Produce One Unit of Sugar Cane for One