📚 Learning Guide
Absolute and Comparative Advantage
easy

Which country is said to have an absolute advantage in the production of a good if it can produce more of that good using the same amount of resources compared to another country?

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Learning Path
Learning Path

Question & Answer
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Choose the Best Answer

A

The country that uses fewer resources

B

The country that produces more of the good

C

The country that has higher opportunity costs

D

The country that can trade the good

Understanding the Answer

Let's break down why this is correct

Answer

A country has an absolute advantage in producing a good when it can create more of that good using the same amount of resources as another country. This means that if both countries use the same number of workers and machines, the country with the absolute advantage will end up making more products. For example, if Country A can produce 10 cars with the same resources that Country B uses to produce only 5 cars, then Country A has an absolute advantage in car production. This concept helps us understand why countries might choose to specialize in certain goods, as they can produce more efficiently. By focusing on what they do best, countries can trade with each other for mutual benefit.

Detailed Explanation

A country has an absolute advantage if it can make more of something with the same resources. Other options are incorrect because Some might think using fewer resources means an advantage; Higher opportunity costs mean giving up more to produce something.

Key Concepts

Absolute advantage
Topic

Absolute and Comparative Advantage

Difficulty

easy level question

Cognitive Level

understand

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