Question

Sloimekia is able to produce more of a particular variety of cloth than its neighboring countries. Sloimekia and its neighboring countries have the same amount of resources for producing this particular cloth. In this case, which of the following is definitely true of Sloimekia?

A)Sloimekia has a higher trade surplus than its neighboring countries.
B)Sloimekia enjoys an absolute advantage in producing this particular cloth.
C)Sloimekia enjoys the highest balance of trade among its neighboring countries.
D)Sloimekia has a lower balance of payments and a lower trade deficit.

Answer 1

Answer: Sloimekia enjoys an absolute advantage in producing this particular cloth.(B)

Step-by-step explanation:

Absolute advantage is the ability of a firm or country to produce a higher quantity of a particular good or service using the same quantity of inputs, or to produce the same quantity of a particular good or service using a lesser quantity of inputs, than the one that is being used by another firm or country that produces identical good or service.

When Sloimekia produces more of a particular cloth than its neighboring countries while using the same amount of resources, it means Sloimekia has absolute advantage in cloth production.