Question
Country A can produce 10 units of cloth or 5 units of
wine in a day. Country B can produce 6 units of cloth or 4 units of wine in a day. Which country has the absolute advantage in the production of cloth and wine?Solution
- Country A:
- Can produce 10 units of cloth in a day.
- Can produce 5 units of wine in a day.
- Country B:
- Can produce 6 units of cloth in a day.
- Can produce 4 units of wine in a day.
- Compare the production of cloth:
- Country A: 10 units of cloth per day
- Country B: 6 units of cloth per day
- Compare the production of wine:
- Country A: 5 units of wine per day
- Country B: 4 units of wine per day
- Country A has the absolute advantage in the production of both cloth and wine.
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