Question

*ECONOMICS* Which situation best illustrates the concept of absolute advantage?

O A. A factory in Vietnam can produce more shoes than other
countries.
O B. The total value of U.S. exports is lower than the value of the
country's imports.
O C. A software company is forced to increase its prices to pay for
rising labor costs.
D. A restaurant buys its ingredients from nearby farms to help the
local economy.

Answer 1

O A. A factory in Vietnam can produce more shoes than other

countries.

Step-by-step explanation:

Absolute advantage is the capability of a commercial entity to produce goods using fewer resources compared to rivals. Using the same inputs, an entity with an absolute advantage produces a larger output compared to competitors. It means the firm has a lower marginal cost of production. Therefore, its products will have the lowest prices in the market.

The factory in Vietnam has an absolute advantage in producing shoes. It is using fewer resources than rivals to manufacture shoes, that why it is producing a higher quantity.