Question

Here are alternate outputs from one day's labor input: USA: 12 bushels of wheat OR 3 yards of textiles. India: 3 bushels of wheat OR 12 yards of textiles. A. has an absolute advantage over India in the production of textiles. B. should export textiles to India. C. has an absolute advantage over India in the production of wheat.

Answer 1

The correct answer is option C.

Step-by-step explanation:

Absolute advantage refers to the situation when a country or individual is able to produce more than its competitors at the same cost or produce the same level of output at a lower cost.

Here, it is given that the US can produce 12 bushels of wheat or 3 yards of textiles in a day. While India can produce 3 bushels of wheat or 12 yards of textiles in a day.

Since the US is able to produce more relatively quantity of wheat in a day, we can say that it has an absolute advantage in the production of wheat.

While, India can produce relatively more quantity of textiles in a day, so we can say it has an absolute advantage in the production of textiles.