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Considering the time taken by Fred and Sandy to construct sheds and shelves, which statement is true?"

A) Fred has an absolute advantage in constructing sheds and shelves.
B) Sandy has an absolute advantage in constructing sheds and shelves.
C) Fred has a comparative advantage in constructing shelves.
D) Sandy has absolute advantage in the production of shelves.

User Paresh
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Final answer:

Without specifics, we cannot say who has the absolute or comparative advantage in constructing sheds and shelves. However, absolute advantage refers to the ability to produce more efficiently, while comparative advantage involves a lower opportunity cost.

Step-by-step explanation:

Given the information that Fred and Sandy take different amounts of time to construct sheds and shelves, we can determine who has an absolute or comparative advantage in producing these goods. An absolute advantage occurs when an individual, business, or country can produce a good or service more efficiently than other entities. A comparative advantage exists when an entity can produce a good at a lower opportunity cost than others. Without specific data on Fred and Sandy's production times, we cannot definitively determine who holds the absolute or comparative advantage in constructing sheds and shelves. However, we can look at the examples provided.

In the examples, France has an absolute advantage over Germany in the production of both goods because it takes less labor for France to produce them. Similarly, Germany has an absolute advantage in producing televisions and video cameras compared to Poland. Poland, however, has a comparative advantage in making televisions since its opportunity cost is lower than Germany's for that particular product. Comparative advantage allows both entities to benefit from trade even when one has an absolute advantage in all products.

User VinceJS
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