Question

Which of the following are true statements?

i. france has an absolute advantage in producing soda.
ii. the united states has a comparative advantage in producing soda.
iii. the united states has an absolute advantage in producing cheese.
iv. the united states has a comparative advantage in producing cheese.

Answer 1

The true statement is i. France has an absolute advantage in producing soda.

Absolute advantage refers to a country's ability to produce a good or service more efficiently than another country, using fewer resources. In this case, if France can produce soda more efficiently than any other country, it has an absolute advantage. This could be due to factors like better technology, access to resources, or skilled labor in the soda production industry.

In summary, France having an absolute advantage in producing soda (statement i) implies that it can produce soda more efficiently than other countries, showcasing its prowess in the soda industry.