Question

If Wendy can produce more of all goods than Tommy in an hour, then * 1 point A. Wendy has an absolute advantage in all goods. B. Wendy does not need to trade with Tommy in order to achieve the gains from trade. C. Wendy has a comparative advantage in all goods. D. Tommy has an absolute advantage in all goods. E. Only Tommy but not Wendy can benefit from trade between the two of them.

Answer 1

A

Step-by-step explanation:

A company has absolute advantage in the production of a good or service if it produces more quantity of a good when compared to other countries

For example, in 1 hour, country A produces 10kg of beans and 5kg of rice and country B produces 5kg of beans and 10kg of rice.

Country A has absolute advantage in the production of beans while country B has absolute advantage in the production of rice

A country has comparative advantage in production if it produces at a lower opportunity cost when compared to other countries.