Question

If a nation has an absolute advantage in the production of a good:

a. it can produce that good at a lower opportunity cost than its trading partner.
b. it can produce that good using fewer resources than its trading partner.
c. it can benefit by restricting imports of that good.
d. it will specialize in the production of that good and export it.
e. none of the above is true.

Answer 1

If a nation has an absolute advantage in the production of a good:

a. it can produce that good at a lower opportunity cost than its trading partner.

Step-by-step explanation:

Absolute Advantage:

In production, the absolute advantage is defined as the capacity of a company or a business or a nation to produce such products that are of good quality in comparison with its competitors while utilizing the same resources (money, time) as its competitors.

• So in this case, the option a is correct because if a nation has absolute advantage in the production then it can produce that good at low opportunity cost than its trading cost. as compared to its competitors.
• The option b is not valid as in absolute advantage in production the quality is better but the resources remain same.
• The option c is not valid as it doesn't have to restrict imports of the good to get the benefit as that good have good quality in comparison with the competitors.
• The option d is not correct as absolute advantage in production make the nation already special in the production.