Question

Belarus has a comparative advantage in the production of linen, but Russia has an absolute advantage in the production of linen. If these two countries decide to trade,

a. Belarus should export linen to Russia.
b. Russia should export linen to Belarus.
c. trading linen would provide no net advantage to either country.
d. Without additional information about opportunity costs, this question cannot be answered.

Answer 1

Answer: Option (a) is correct.

Step-by-step explanation:

A country has a comparative advantage in producing a commodity if the opportunity cost of producing that commodity in terms of other commodity is lower than the other country.

A country has a absolute advantage in producing a commodity whose production require less number of resources than the other country.

A country exports the commodity in which it has a comparative advantage and imports commodity in which it has a comparative disadvantage.

Therefore, if both the countries decide to trade then Belarus should export linen to Russia.