Question

Until recently, the United States could produce oil-drilling equipment more efficiently than other countries, and, in a sense, monopolized the industry. In the market for oil-drilling equipment the United States had a(n) _________.

a. positive advantage.b. comparative advantage.c. negative advantage.d. absolute advantage.e. marginal advantage.

Answer 1

absolute advantage

Step-by-step explanation:

Until recently, the United States could produce oil-drilling equipment more efficiently than other countries, and, in a sense, monopolized the industry. In the market for oil-drilling equipment the United States had an absolute advantage.

Absolute advantage can be defined as the capability to produce more of a given product using less of a given resource than a competing entity. on the other hand, comparative advantage refers to the ability of a party to produce a particular good or service at a lower opportunity cost over another.

Looking at the scenario, what applies is absolute advantage because it mentions that production is done more efficiently by the United States. Efficiency relates to using less inputs to get more output which is characteristic of absolute advantage.

Answer 2

D. Absolute advantage

Step-by-step explanation:

Absolute Advantage is the ability for a country or organization or individual to produce a greater amount of a specific commodity than their competitors while using the same amount of resources. Adam Smith argued for this in international trade theories when he postulated that each country should specialize on those commodities it can produce at lower absolute cost than others.

When a country is best at producing a particular type of good more efficiently both in cost and quantity than its competitors, they are said to have absolute advantage in the production of that good. In this case, the United States had absolute advantage in producing oil drilling equipment.