Question

Country X can cut, prepare, and export lumber using fewer worker hours than Country Y. Country Y can produce lumber but produces cars more efficiently than it produces lumber. It also produces cars more efficiently than Country X. Which of these statements is accurate?

A. Country X will import Country Y's lumber due to absolute advantage
B. Country X will import Country Y's lumber due to comparative advantage
C. Country Y will import Country X's lumber due to comparative advantage
D. Country Y will import Country Y's lumber due to absolute advantage

Answer 1

C. Country Y will import country X's lumber due to comparative advantage.

Step-by-step explanation:

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Answer 2

The correct answer is option C.

Step-by-step explanation:

Absolute advantage refers to the situation where a country or individual can produce at a relatively lower cost or using fewer inputs.

Comparative advantage refers to the situation where a nation or an individual can produce a good at a relatively lower opportunity cost.

Country X takes fewer labor-hours to produce lumber than country X while country Y can produce cars more efficiently.

This implies that country X has a comparative advantage in producing lumber and country Y has a comparative advantage in producing cars.

So country Y will import lumber from country X and export cars to them.